Bakers chide sugar growers, government on cost

by Ron Sterk
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WASHINGTON — Two baker associations, both members of the Coalition for Sugar Reform, chided sugar growers, Congress and the U.S. Department of Agriculture for millions of dollars spent on the sugar program prior to the government shutdown due to lack of approved funding.

“The federal government is shut down, but sugar beet growers in Minnesota and North Dakota managed to secure a bailout at the midnight hour,” the Independent Bakers Association said.

The U.S.D.A. late Sept. 30 said it had bought and immediately re-sold 136,026 tons of refined beet sugar under the Feedstock Flexibility Program in an effort to reduce the sugar oversupply and avoid forfeitures on sugar loans that matured Sept. 30. All of the sugar was refined beet sugar, from companies located in Minnesota, Michigan, Colorado and Oregon. The U.S.D.A. said it paid about $65.9 million for the sugar and sold it for about $12.6 million for a net cost of $53.3 million. A total of 415,000 tons of sugar had been offered in the F.F.P. tender, but the U.S.D.A. buys only the amount of sugar that may be immediately resold to biofuels producers. In an earlier tender under the F.F.P., the U.S.D.A. bought and resold 7,118 tons of sugar out of 99,375 tons offered.

“Today we wake up and learn that the government has shut down due to budgetary disagreements, yet the U.S.D.A. was able to squeak out one more bonus to sugar growers before the shutdown occurred,” said Robb MacKie, president and chief executive officer of the American Bakers Association. “This is a clear sign of misguided priorities on the part of members of Congress who had a chance to save millions in taxpayer dollars.”

Cory Martin, director of government relations for the A.B.A., added, “The U.S. government has now spent over $141 million taxpayer dollars since July to support this so-called ‘no cost’ program.”

In additional activity, the Grand Fords Herald reported that American Crystal Sugar, a Moorhead, Minn.-based cooperative of about 3,000 sugar beet growers, indicated it will default on about $71.2 million of government loans that matured Sept. 30, of which sugar held as collateral will be forfeited, as allowed by law. A total of about $355 million in loans to sugar processors came due at the end of September, although some of that was removed through the F.F.P. tender. A total of 85,375 tons of raw cane sugar from Louisiana and refined beet sugar from North Dakota were forfeited at the end of August. That sugar was exchanged for export credits in September.

Sugar producers contend the sugar program, which has survived intact in both versions of the House and Senate farm bills, provides a safety net for growers similar to other farm programs. This year’s forfeitures and other program expenditures were the first outlay for the program by the government in almost a decade. The producers also note that U.S. sugar imports from Mexico were projected at a record 2,121 million tons in 2012-13 (which ended Sept. 30), up 98% from 2011-12, which contributed to the U.S. sugar oversupply and offset much of the U.S.D.A.’s efforts to reduce domestic supplies. Under the North American Free Trade Agreement, sweeteners can move duty free between Mexico and the United States.

“Members of Congress will have yet another opportunity to reform this arcane program in the coming weeks,” Mr. MacKie said. “It is our hope that Congress will now be able to see the program for what it really is and adopt modest reforms that will help restore some fairness to everyone participating in the sugar market.”
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