[Congressional Record Volume 147, Number 77 (Wednesday, June 6, 2001)]
[House]
[Pages H2949-H2953]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       U.S. SUGAR SUBSIDY POLICY

  The SPEAKER pro tempore (Mr. Otter). Under the Speaker's announced 
policy of January 3, 2001, the gentleman from Illinois (Mr. Davis) is 
recognized for 60 minutes.
  Mr. DAVIS of Illinois. Mr. Speaker, I must say that I noted with 
tremendous interest the discussion which just took place, and, of 
course, I think there is always the likelihood and the possibility that 
countries get larger and larger and opportunities become greater and 
that those opportunities should be shared by and used by as many people 
as we can possibly make them available to.
  Mr. Speaker, earlier today I participated in a press conference 
called by the gentleman from Florida (Mr. Miller) and the gentleman 
from California (Mr. George Miller). They called this press conference 
to announce their introduction of legislation to change our sugar 
policy and to phase out some of those huge subsidies that we are 
providing for the control of the sugar industry to small groups of 
people and small business concerns; that is small in numbers but 
certainly large in terms of influence and large in terms of their 
control of the industry.
  Also at that press conference was the gentleman from Massachusetts 
(Mr. Frank) and the gentleman from Ohio (Mr. Chabot). The whole 
question of our sugar policy is rocking the country in many places 
because of the fact it is having a tremendously negative impact upon 
the ability of people to continue to grow and develop in their local 
communities. Every country and every government that is of a sugar-
producing nation has intervened to protect their domestic industry from 
fluctuating world market prices. Such intervention has been necessary, 
it is argued, because both sugar cane and sugar beats must be processed 
soon after harvest using costly processing machinery. When farmers 
significantly reduce production because of low prices, a cane or beat 
processing plant typically shuts down, usually never to reopen. This 
close link between production and capital-intensive processing makes 
price stability important to industry survival.
  The United States has a long history of protection and support for 
its sugar industry. The Sugar Acts of 1934, 1937, and 1948 required the 
United States Department of Agriculture to eliminate domestic 
consumption and to divide this market for sugar by assigning quotas to 
U.S. growers and foreign countries, authorized payments to growers when 
needed as an incentive to limit production, and levied excise taxes on 
sugar processed and refined in the United States.
  This type of sugar program expired in 1974, following a 7-year period 
of markets relatively open to foreign sugar imports, mandatory price 
support only in 1977 and 1978, and discretionary support in 1979. 
Congress included mandatory price support for sugar in the Agriculture 
and Food Act of 1981 and the Food Security Act of 1985. Subsequently, 
the 1990 Farm Program, the 1993 Budget Reconciliation, and the 1996 
Farm Program laws extended sugar program authority through the 2002 
crop year.
  Even with price protection available to producers, the United States 
historically has not produced enough sugar to satisfy domestic demand 
and, thus, continues to be a net sugar importer. Historically, domestic 
sugar growers and foreign suppliers share the United States market in a 
roughly 55 to 45 split. This, though, has not been the case in recent 
years. In fiscal year 2000, domestic production filled 88 percent of 
U.S. sugar demand for food and beverage use. Imports covered 12 
percent. A high fructose corn syrup displaced sugar in the United 
States during the early 1980s and as domestic sugar production 
increased in the late 1980s.
  The USDA restricts the amount of foreign sugar allowed to enter the 
United States to ensure that market prices do not fall below the 
effective support levels. The intent in maintaining prices at or above 
these levels is to make sure that the USDA does not acquire sugar due 
to a loan forfeiture. A loan forfeiture, turning over sugar pledged as 
loan collateral, occurs if a processor concludes that market prices at 
the same time of a desired sale are lower than the effective sugar 
price support level implied by the loan rate.
  Now, I mention all of this background to mention the fact that there 
has been reason for the development of our policy. But then as times 
change, so is there a need for policy change, and so, Mr. Speaker, I 
approach the subject of sugar subsidies from a little different angle, 
something slightly different than just looking at what it is that we do 
for the producers.
  In my district today, tonight, more than 600 jobs are at risk, in 
part because of the sugar subsidy. So my view this evening is the view 
of the community, the point of view of the working man or woman. We 
live in a society of plenty and, still, 20 percent of our children live 
in poverty. In areas where we measure near poverty, such as California, 
the rate rises to 45 percent. Similar numbers characterize my district 
in the State of Illinois. Over the past 35 years, our national 
production of goods and services has more than doubled, yet the 
inflation-adjusted income of most poor Americans is lower today than it 
was in 1968.
  A recent CBO report revealed that after-tax income of the poorest 20 
percent of U.S. households fell between 1979 and 1997, while the income 
of the wealthiest 1 percent of U.S. households grew a staggering 157 
percent.

                              {time}  1800

  More egregious, wage and equality, that is, the relative drop in pay 
for the lowest-paid workers is again on the rise. This is accompanied 
by an actual loss of jobs in our economy last month of 19,000; and an 
increase in the number of laid off workers as a share of the workforce. 
Manufacturing continues to bear the brunt with employment down 124,000 
in May and job loss this year averaging 94,000 per month.
  Most folks know that some of these recent setbacks are at least in 
part due to the current economic downturn we are experiencing. But 
especially in manufacturing, we have been experiencing a long-term so-
called structured downturn for two generations. Jobs With Justice 
counted three-quarters of a million jobs lost as a result of NAFTA 
sucking jobs out of the United States; 37,000 of those jobs were lost 
in Illinois. Total job loss in Illinois was much worse. Between 1970 
and 1984, the city of Chicago lost a total of 233,873 jobs in the 
manufacturing sector and another 39,660 in wholesaling as a result of 
plant closings and layoffs. These job losses hit especially hard at 
women, African Americans, Latinos, members of other minority groups.
  In addition to jobs lost, occupations which dislocated workers had 
high concentrations of women. This pattern of job loss and dislocation 
can be traced all the way back to the end of the Second World War; and 
of course although I mention Chicago, it is not limited to Chicago and 
Illinois. Between 1947 and 1963, Detroit, for example, lost 14,000 
manufacturing jobs. No wonder the

[[Page H2950]]

Midwest came to be called the Rust Belt. In fact, though the rust has 
impacted all of America, globalization has accelerated the process of 
deindustrialization, but that does not mean that we must resign 
ourselves to those consequences. On the contrary, what it means is that 
we need a policy, a trade policy, an economic policy, a foreign policy, 
which serves the interest of every American, every working man, every 
working woman. Every man and every woman.
  Anyone who claims that globalization is just about free trade, about 
letting the market work, is not telling the whole story. If NAFTA were 
only about free trade, the treaty would have been a page or two long, 
and simply declare all taxes and barriers to free trade are hereby 
repealed.
  Instead, the treaty is a thousand pages of dense legal type and has 
hundreds of additional pages of highly technical appendices. All that 
legalese is there to protect specific interests and specific 
institutions. What is not protected is the jobs of ordinary Americans. 
What is not protected is the environment. What is not protected is the 
health and safety of the American consumer.
  Mr. Speaker, there is a role for the public sector, and there is a 
role for the private sector. Of course I am here today to advocate for 
the removal of an obstacle to economic growth, a relic of agricultural 
needs and times that have come and gone. While there have been efforts 
to do this in the past, I trust that this year we will be more 
successful. But it must be part of a broader concern, a broader policy 
of protecting the jobs of ordinary Americans; and it must be part of a 
policy that demands corporate responsibility, performance standards, 
public disclosure, fairness and equity in return for the nourishing 
environment our corporations enjoy.
  Mr. Speaker, the Bible teaches that we sometimes ought to consider 
what profits a man who loses his soul. I guess I would probably phrase 
that differently and maybe would ask the question, What profits a 
Nation which abandons its people?
  I believe that is exactly what we have done. That is exactly what we 
continue to do as long as we have an archaic sugar policy that does not 
allow jobs and economic development to take place in neighborhoods and 
communities throughout the country that are in need of fairness and 
fair opportunity to expand, to grow, as opposed to retrenching and 
going out of business.
  Mr. Speaker, our sugar policy is a very important issue that has the 
potential to cost our respective districts many jobs. So now the 
question becomes and the question is: Should the Federal policy seek to 
ship overseas the jobs of hardworking American citizens in order to 
bestow huge subsidies on a relatively small group of individuals and 
businesses, many of whom are already wealthy? I would think not, and I 
would venture that the vast majority of Americans would agree with me.
  That is precisely what is occurring because of the sugar price 
support program, a program which has thrown onto the unemployment rolls 
thousands of my constituents, other residents of the city that I come 
from, and other people all over the country who rely upon the candy and 
food industries for livelihood.
  The sugar price support program is in crisis. Approximately 65,000 
Americans are employed in the candy industry nationwide. However, 
according to the Chicago Tribune, since the 1990s, 4,000 of those jobs 
have been lost and have left the city of Chicago alone. Just recently 
we got word that one of our plants, Brach's Candy Company, with 1,600 
jobs was going to move out of the city, out of the county, out of the 
State, out of the Nation, into Argentina. They are going to move 
because they say that they pay twice as much for sugar as do their 
overseas competitors.

  Communities like those around the Brach's plant are in many instances 
already devastated, have already experienced high levels of 
unemployment, have already had to dig their way out as we have seen 
change in trends. So I would point out, Mr. Speaker, that these job 
losses are in addition to those in the cane refining industry. Since 
the sugar price support program was enacted in 1981, 12 of 22 cane 
sugar refiners, including one in Chicago, have gone out of business, in 
all likelihood never to return. As many as 4,000 high-paying union jobs 
were lost when these refineries shut down.
  Unlike most other agricultural programs, the sugar program has not 
since its inception in the 1980s been reformed to reflect change in 
market conditions. The program is still aimed at keeping sugar prices 
high by limiting imports and making loans to growers. Operating under 
the price protection of this program, domestic sugar producers taking 
advantage of both technological advances and good weather have 
increased their production dramatically, so much so that production 
reached such high levels last year that the Federal Government, our 
government, my government, your government, bought 132,000 tons of 
sugar off the domestic market at a cost of $54 million. There are some 
who would call this a sweetheart, I guess you cannot get much sweeter 
than sugar, deal. In fact, when you include the cost incurred by the 
government from sugar loan forfeitures, the cost to the United States 
taxpayer for the sugar program was $465 million last year, and the 
United States Government is now having to pay additional millions of 
dollars to store some 800,000 tons of sugar. So there you have it.
  All of our constituents pay for the sugar program in either their 
taxes and in the prices of the products they purchase at the grocery 
store. And then, of course, some of us pay by losing their jobs. The 
jobs being lost in the candy industry are not moving to another city, 
county, or State, but to other countries such as Mexico or Argentina 
where sugar can be purchased at world prices.
  All of the way back to my days when I served on the Chicago City 
Council, I have seen the gradual decline and loss of jobs in the candy 
industry, and specifically in urban Chicago.
  Therefore, I am certain that we must find a solution to prevent the 
further loss of jobs throughout urban America, and I would encourage my 
colleagues to find me and find such a solution. I believe that such a 
solution has been proposed today. Therefore, I would urge support for 
the Miller-Miller legislation which was introduced earlier this day.
  I am also pleased to note that my colleague from the city of Chicago, 
from the First Congressional District, the oldest, as a matter of fact, 
African American congressional district currently standing in the 
United States of America, for example, it was that area after the 
period of Reconstruction was over and all African Americans had been 
put out of the Congress, and we went through a period where there was 
no black representation in Congress for about 30 years, finally from 
the First Congressional District of Chicago came Oscar DePriest; and 
following in the footsteps of Oscar DePriest and the footsteps of the 
late Mayor Harold Washington, I am pleased that my colleague, the 
gentleman from Illinois (Mr. Rush), has come to join us and participate 
in this discussion.
  Mr. RUSH. Mr. Speaker, I thank the gentleman who has been my friend 
and my colleague, my compatriot, my comrade, in the many, many 
struggles that we both have been involved in throughout our adult 
lives.

                              {time}  1815

  My friend, the gentleman from Illinois (Mr. Davis), who represents 
the great Seventh Congressional District in the city of Chicago in the 
State of Illinois is beyond comparison as a gallant and valiant fighter 
for the interests of not only the citizens of the Seventh Congressional 
District but for the interests of all American people, particularly 
those who are working and struggling day by day to make their lives 
better. It is upon this occasion that I commend him once again for his 
extraordinary leadership on this particular issue of the Federal 
subsidies of the sugar industry here that we are discussing this 
afternoon.
  The gentleman from Illinois has laid out the problem. I would like to 
just share in his analysis, in his views. I would like to share his 
description of this Federal sugar subsidy program, which is unlike 
many, many other Federal crop subsidies. This Federal sugar subsidy 
program disproportionately impacts American citizens and American 
businesses. The sugar program

[[Page H2951]]

negatively impacts American consumers, particularly and especially the 
poor. When you strip it apart, when you cut it down to the essence of 
this program, we find that this Federal sugar subsidy program is really 
a tax on food items that contain sugar. That is all that it is. It is a 
tax, a tax on the food items that contain sugar.
  The General Accounting Office estimates that the total cost to 
consumers and users of sugar is $1.8 billion annually. A tax for those 
who use sugar of $1.8 billion year after year. Even more detrimental, 
the sugar tax is regressive. That is, that it places the greatest 
burden on those who are least able to pay, those who are on fixed 
incomes, those who are struggling to provide food on their tables on a 
day-to-day basis, those who are least able to pay in this society are 
forced to pay $1.8 billion each and every year to sugar producers.
  If U.S. consumers like those who are in my district, the first 
district of Illinois, and those who are in the district of the 
gentleman from Illinois (Mr. Davis), the Seventh District of Illinois 
and others throughout America, if consumers had been given access to 
world-price sugar, say, in 1999, a five-pound bag of sugar that cost 
$2.17 would have only cost $1.38. We paid almost twice the cost for a 
five-pound bag of sugar in 1999 as we should have paid.
  I look around and I think about how many parents, mothers and 
fathers, those who are working class, those who are striving on a day-
to-day basis to try to make ends meet, how many of us would have loved 
to pay almost half the cost of sugar and thereby saving our little 
money to go toward school supplies and school clothing and maybe even 
just a night out with the family at the movies but could not afford to 
do that simply because of these exorbitant prices that we have been 
forced to pay for the cost of a five-pound bag of sugar.
  The sugar program unfairly disadvantages American businesses. We know 
that the United States has a long history of internationally known 
candy makers. We are the capital of candy makers throughout the world. 
Chicago, the district and the city that both the gentleman from 
Illinois (Mr. Davis) and I represent is the capital for candy makers. 
All across this country, whether it is in Pennsylvania with Hershey's 
or Brach's; Kraft or M&M/Mars in Chicago; Nabisco in the great city of 
Holland, Michigan; or Nestle's in California, the United States candy 
industry brings millions of dollars in tax revenues to communities 
throughout this country. As many as 293,000 workers in 20 States depend 
on these same businesses for their livelihood. People work for these 
candy manufacturers. Families are fed, clothed and housed because of 
their salaries that are generated from working for these candy 
manufacturers. Children are sent to school, to college based on their 
parents' ability to provide dollars and assistance to them. Our 
livelihood depends on these candy manufacturers.
  And what are we doing? The Federal subsidy program for sugar is 
placing U.S. candy manufacturers at a competitive disadvantage by 
raising the cost of sugar in this country. We are driving candy 
manufacturers out of our country. Many of them are being forced to 
consider moving, as the gentleman from Illinois said earlier, not from 
Illinois to Indiana, not from Pennsylvania to Ohio, but from this 
country to other countries, including Mexico.
  They are forced out of our Nation because of our Federal subsidy 
program for sugar. Almost 300,000 people, 293,000 to be exact, are 
going to lose their jobs unless we find a remedy, unless we correct 
this injustice, this problem that we are confronted with as it relates 
to Federal subsidies for sugar producers. If we want to keep the candy 
industry in this country and keep it healthy and give it the protection 
that it needs so that it can keep our citizens working and our families 
healthy and stable and viable, then we can do nothing less than do away 
with the current Federal sugar subsidy program.
  We can do no less than bring this Federal sugar subsidy program to a 
screeching halt. We can do no less than give these workers who are 
employed by candy manufacturers the kind of protection that they need, 
give them the kind of support that they need, give them the kind of 
policies at the Federal level that would help them to continue to work 
at jobs that help them take care of their families, in jobs that will 
help them provide food and clothing and shelter for their families. We 
can do no less than to give them the kind of support that we need to 
give them so that they will be able to maintain their families in a way 
so that their children will grow up to be healthy and productive 
American citizens.
  I want to thank again my friend the gentleman from Illinois (Mr. 
Davis) and the sponsors of the bill, the gentleman from Florida (Mr. 
Miller) and the gentleman from California (Mr. George Miller). I want 
to thank all of them for looking out for the little guy, for bringing 
this issue to the floor, to the well of the House, to inform the 
American people that what we are doing with this Federal sugar subsidy 
program, it is almost criminal. It is a tax, a regressive tax, on those 
who are least able to pay it. It does not make sense, it is backwards, 
it is exploitive, it is discriminatory, it is regressive, and we have 
got to stop it and we have got to stop it right now. I again thank the 
gentleman from Illinois (Mr. Davis) for his extraordinary leadership on 
this particular issue.
  Mr. DAVIS of Illinois. I thank the gentleman from Illinois (Mr. Rush) 
and I certainly want to thank him for his very passionate and eloquent 
description of the problem. I had not really thought in terms of 
further taxation, but when he makes the point that this becomes 
additional taxation as we purchase beverages, as we purchase candy, 
and, more importantly, as we purchase ordinary food which contains 
sugar, that is another way of looking at the issue. I certainly agree 
with him that it has to stop.
  We are also pleased that we have been joined by the dean of the 
Democratic delegation from the State of Illinois, one of the real 
experts on aviation in this country but one who understands not only 
aviation but urban issues and urban problems all over America, the 
gentleman from Illinois (Mr. Lipinski). We are so delighted that he has 
joined us, and we thank him so much for coming.
  Mr. LIPINSKI. I appreciate very much the gentleman taking this 
special order tonight. It is another demonstration of his outstanding 
leadership here in the Congress of the United States. I am certainly 
happy to see that the gentleman from Illinois (Mr. Rush) has also 
joined the gentleman here tonight, another excellent leader in the 
Congress from the State of Illinois.
  Mr. Speaker, I rise today to express my strong support for ending the 
sugar subsidy program. A program which some claim costs absolutely 
nothing is actually costing the government millions and consumers 
billions of dollars. This program triggers unemployment in the sugar 
refining industry and is not how a farm program should work.
  In the 1996 farm bill, we committed ourselves to phasing out price 
supports for every commodity except sugar and peanuts. It is time to 
level the playing field and expose the sugar program for the sham that 
it is. The sugar support program is supposedly designed to operate at 
no direct cost to the Federal Government. The Department of Agriculture 
provides a loan to sugar growers. The growers use sugar as collateral.

                              {time}  1830

  When the loan comes due, if the processor can make a profit, repay 
the loan and sell the sugar on the open market, that is what he does. 
However, if raw sugar prices fall below a predetermined price, the 
growers simply default on the loan and forfeit the sugar they put up 
for collateral, a practice which is becoming increasingly more common.
  Clearly, this is a cost to the taxpayers and a waste of taxpayers' 
dollars.
  In fact, according to the USDA, last year the government bought more 
than 1 million tons of sugar for $435 million and it now pays $1.4 
million monthly to store the sugar. In addition, the government gave 
some of the sugar back to the same industry that forfeited it in the 
first place in exchange for the processors getting the farmers to 
destroy some of their growing crops. As a result of the sugar program, 
domestic prices for raw sugar are typically twice world market prices 
and sometimes more.

[[Page H2952]]

  Currently, sugar costs 9 cents a pound on the world market but the 
government sets the domestic price for raw sugar at 18 cents a pound 
and 22.9 cents for refined sugar beets. According to the General 
Accounting Office, this price difference means that consumers are 
paying $1.9 billion more than they need to for sugar and sugar 
products. Yet, maybe most importantly, hundreds of jobs have been lost 
in the refining industry in just the past few years due to the unwise 
sugar subsidy. Since the mid-1980s, 12 of the nation's 22 cane sugar 
refineries have gone out of business, including one in Chicago. Just 
last year, a large Brach's candy factory on the West Side of my 
hometown Chicago was forced to shut down due to inflated sugar prices.
  What is particularly infuriating about this situation is that these 
refinery jobs are good-paying jobs located in inner cities and areas 
where other employment opportunities are scarce.
  For example, the confectioners who used to use domestic sugar are 
instead having to send those jobs to Canada or Mexico, where they can 
purchase affordable sugar, costing American working men and women their 
jobs. It is the families who work in these sugar refineries that are 
being closed down who are suffering the most.
  The Committee on Agriculture is writing a new farm bill, and we 
cannot afford to have the sugar lobby write the sugar policy. Until the 
sugar subsidy program is phased out, consumers will pay more for 
products containing sugar. Taxpayers will continue to pay more to buy 
surplus sugar. Workers in the candy industry, in the cane refining 
industry, will continue to lose their jobs. The sugar program will 
continue to benefit a few without solving the problems of family 
farmers. We must insist on real reform in the sugar program and end the 
regulations that are costing Americans money and American jobs.
  Once again, I want to thank the gentleman from Illinois (Mr. Davis) 
for holding this special order tonight. This is a very important area 
of concern for the Congress of the United States. I am sure that with 
his leadership we will be able to do something about it in this coming 
agriculture bill that we will be working on very shortly. I thank the 
gentleman once again for giving me the time tonight.
  Mr. DAVIS of Illinois. Madam Speaker, I thank the gentleman from 
Illinois (Mr. Lipinski) very much for his comments. Again, I want to 
thank the gentleman for coming over. I think he has put his finger 
right on the issue when he talks about consumers have to pay 
unnecessarily. I understand that one has to pay for everything that 
they get but I do not understand when one has to pay more just so a 
small industry can continue to benefit to the detriment of others. So I 
thank the gentleman for raising the issue.
  Mr. LIPINSKI. Madam Speaker, will the gentleman yield?
  Mr. DAVIS of Illinois. I yield to the gentleman from Illinois.
  Mr. LIPINSKI. Madam Speaker, what I was going to say is that I can 
understand somewhat subsidizing an industry that is creating jobs here 
in the United States of America. I think that that sometimes is good 
public policy. But to me here we have a law, a program, which is 
costing the American citizens more money not only out of their pocket 
directly but in taxes; as I said earlier, even more importantly, 
costing us jobs in this country. It has to be an absolute minute 
minority of American citizens that benefit out of this program at the 
expense of all the other American citizens, and really something should 
be done about this. As I say, as far as public policy, if an industry 
is going to be subsidized in this country in some way, shape or form, 
then they should be creating economic development; they should be 
creating jobs.
  Mr. DAVIS of Illinois. Madam Speaker, I thank the gentleman for 
pointing out that we are going to be rewriting the farm bill. I think 
this is an excellent opportunity to correct what we should have done a 
number of years ago, and so I thank the gentleman again for coming over 
and for being a part.
  I am about to summarize this, Madam Speaker, but I have remarks about 
the Brief History of the Sugar Program that I would include in the 
Record at this point.

                        Background and Analysis


                   brief history of the sugar program

       Governments of every sugar producing nation intervene to 
     protect their domestic industry from fluctuating world market 
     prices. Such intervention is necessary, it is argued, because 
     both sugar cane and sugar beets must be processed soon after 
     harvest using costly processing machinery. When farmers 
     significantly reduce production because of low prices, a cane 
     or beet processing plant typically shuts down, usually never 
     to reopen. This close link between production and capital 
     intensive processing makes price stability important to 
     industry survival.
       The United States has a long history of protection and 
     support for its sugar industry. The Sugar Acts of 1934, 1937, 
     and 1948 required the U.S. Department of Agriculture (USDA) 
     to estimate domestic consumption and to divide this market 
     for sugar by assigning quotas to U.S. growers and foreign 
     countries, authorized payments to growers when needed as an 
     incentive to limit production, and levied excise taxes on 
     sugar processed and refined in the United States. This type 
     of sugar program expired in 1974. Following a 7-year period 
     of markets relatively open to foreign sugar imports, 
     mandatory price support only in 1977 and 1978, and 
     discretionary support in 1979, Congress included mandatory 
     price support for sugar in the Agriculture and Food Act of 
     1981 and the Food Security Act of 1985. Subsequently, 1990 
     farm program, 1993 budget reconciliation, and 1996 farm 
     program laws extended sugar program authority through the 
     2002 crop year. Even with price protection available to 
     producers, the United States historically has not produce 
     enough sugar to satisfy domestic demand and thus continues to 
     be a net sugar importer.
       Historically, domestic sugar growers and foreign suppliers 
     shared the U.S. sugar market in a roughly 55/45 percent 
     split. This, though, has not been the case in recent years. 
     In FY2000, domestic production filled 88 percent of U.S. 
     sugar demand for food and beverage use; imports covered 12 
     percent. As high fructose corn syrup (HFCS) displaced sugar 
     in the United States during the early 1980s, and as domestic 
     sugar production increased in the late 1980s.
       The loan rate for raw cane sugar is statutorily set. The 
     loan rate for refined beet sugar historically was set in 
     relation to raw sugar under a prescribed formula; however, 
     this rate now is fixed for 7 years at the 1995 level. Loan 
     support for beet sugar is set higher than for raw sugar, 
     largely reflecting its availability as a product ready for 
     immediate industrial food and beverage use or for human 
     consumption (unlike raw cane sugar). By contrast, raw cane 
     sugar must go through a second stage of processing at a cane 
     refinery to be converted into white refined sugar that is 
     equivalent to refined beet sugar in end use.
       Loan Rates and Forfeiture Levels. The FY2001 loan rates are 
     set at 18 cents/lb. for raw cane sugar, and 22.9 cents/lb. 
     for refined beet sugar. These loan rates, though, do not 
     serve as the price floor for sugar. In practice, USDA's aim 
     is to support the raw cane sugar price (depending upon the 
     region) at not less than 19.1 to 20.7 cents/lb. (i.e., the 
     price support level in a region plus an amount that coves a 
     processor's cost of shipping raw cane sugar to a cane 
     refinery plus the interest paid on any price support loan 
     taken out less a forfeiture penalty applicable under certain 
     circumstances). Similarly, USDA seeks to support the refined 
     beet sugar price at not less than 23.2 to 26.2 cents/lb. 
     (i.e., the regional loan rate plus specified marketing costs 
     plus the interest paid on a price support loan less the 
     forfeiture penalty), depending on the region. These ``loan 
     forfeiture,'' or higher ``effective'' price support, levels 
     are met by limiting the amount of foreign raw sugar imports 
     allowed into the United States for refining and sale for 
     domestic food and beverage consumption.
       Import Quota. USDA restricts the amount of foreign sugar 
     allowed to enter the United States to ensure that market 
     prices do not fall below the ``effective'' support levels. 
     The intent in maintaining prices at or above these levels is 
     to make sure that USDA does not acquire sugar due to a loan 
     forfeiture. A loan forfeiture (turning over sugar pledged as 
     loan collateral) occurs if a processor concludes that 
     domestic market prices at the time of a desired sale are 
     lower than the ``effective'' sugar price support level 
     implied by the loan rate. Foreign suppliers absorbed the 
     entire adjustment and saw their share of the U.S. market 
     decline.


                      1996 Farm Act: Sugar Program

       To support U.S. sugar market prices, the USDA extends 
     short-term loans to processors and limits imports of foreign 
     sugar. The 1996 farm bill provisions, though, change the 
     nature of the ``loan'' available to processors. The form of 
     price support is now determined largely by the domestic 
     demand/supply situation and USDA's subsequent decision on 
     what the fiscal year level of sugar imports will be. As a 
     result, these parameters together with market developments 
     have injected more-than-usual price uncertainty into the U.S. 
     sugar market.
     General Overview
       The sugar program continues to differ from the grains, 
     rice, and cotton programs in that USDA makes no income 
     transfers or payments to beet and cane growers. In contrast, 
     the program is structured to indirectly support the incomes 
     of domestic growers and sugar processors by limiting the 
     amount of

[[Page H2953]]

     foreign sugar allowed to enter into the domestic market using 
     an import quota--a policy mechanism that lies outside the 
     scope of the program's statutory authority. Accordingly, USDA 
     decisions on the size of the import quota affect market 
     prices, and are made carefully to ensure that growers and 
     processors do realize the benefits of price support they 
     expect to receive as laid out in program authority.
       Price Support. USDA historically has extended price support 
     loans to processors of sugarcane and sugar beets rather than 
     directly to the farmers who harvest these crops. Growers 
     receive USDA-set minimum payment levels for deliveries made 
     to processors who actually take out such loans during the 
     marketing year--a legal requirement. Other growers negotiate 
     contracts that detail delivery prices and other terms with 
     those processors that do not take out loans.

  In summarizing or closing out or closing up, let me just say this: I 
am not opposed to helping farmers. As a matter of fact, we have farm 
programs for wheat, corn, cotton and many other crops. These programs 
give direct assistance to farmers and allow market prices to be set by 
supply and demand. Farmers receive help but not at the expense of 
workers and consumers, but the sugar program is different. The sugar 
program helps producers by hurting other people. That is not right. 
There are other ways to help sugar farmers. The sugar program keeps our 
market prices higher than world prices. Domestic sugar prices are about 
21 cents a pound compared to world prices of about 9 cents a pound. Now 
the price gap is costing jobs. Brach's Confectioners, Incorporated, 
will close its candy factory on Chicago's West Side, putting 1,100 
people out of work in the next 3 years. Other facilities have closed, 
too, including a Nabisco plant last year. In fact, there were 13,000 
workers in Chicago's candy industry 5 years ago but now only 10,000. 
One reason for the decline, increasing imports of hard candy made with 
world priced sugar. These nonchocolate candy imports have risen 
steadily from less than 12 percent of the U.S. market in 1997 to 17 
percent in 1999. This candy is cheaper because it is made with sugar 
that costs 9 cents a pound instead of 21 cents a pound. Our quota 
system for sugar, along with the high price supports, is costing 
industrial jobs because imports are displacing United States products.
  The quotas may be helping large sugar corporations in Southern 
Florida but they are hurting American workers in Chicago who do not 
have quotas to protect them. It is time to change this dysfunctional 
sugar program. We can help producers without hurting workers and other 
farmers.
  The new farm bill must reform sugar subsidies. We must support the 
Miller-Miller legislation and we must make sure that as we reauthorize 
legislation to govern farm, farmers and farm products in our country, 
that we reform the sugar program and make it fair.

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