Sugar Program Proposals for the
2012 Farm Bill
Remy Jurenas
Specialist in Agricultural Policy
June 19, 2012
Congressional Research Service
7-5700
www.crs.gov
R42551
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Sugar Program Proposals for the 2012 Farm Bill
Summary
The sugar program is structured to operate at no cost to the federal government—an objective that
has been achieved over the last decade primarily using two tools: marketing allotments that limit
the amount that sugar processors can sell, and import quotas that restrict the quantity of foreign
sugar allowed to enter the U.S. market. Since the program records no outlays, its future did not
receive attention among the proposals submitted to the House and Senate Agriculture Committees
for revising the farm safety net and reducing farm program spending.
Producers of sugar beets and sugarcane, and the processors of these crops into sugar, favor
retaining the current program without change. They highlight the jobs and economic activity
created by the domestic sugar sector. Two general farm organizations and a coalition of some
developing countries that benefit from selling against their shares of the U.S. sugar import quota
also support continuing the current sugar program.
Food manufacturing firms that use sugar in their products advocate program elimination or a
transition toward a free market in sugar in the United States. In support of these changes, they
point to the higher wholesale refined sugar prices paid since the 2008 farm bill provisions took
effect (twice the level compared to the previous 2002 farm bill period). Consumer, trade advocacy
groups, and general business organizations that favor freer trade support their position.
The Senate Agriculture Committee’s reported farm bill (S. 3240) would reauthorize the current
sugar and sugar-to-ethanol programs without any changes through crop year 2017. The American
Sugar Alliance, representing sugar producers and processors, applauded the committee’s decision
to continue the “no-cost” U.S. sugar policy. The Coalition for Sugar Reform, representing sugar-
using food manufacturing firms and their allies, expressed disappointment that the committee
extended what they call an “outdated and anticompetitive” program. The House Agriculture
Committee plans to consider its version of a farm bill in late June.
Congressional opponents of current U.S. sugar policy have stated their intent to seek changes to
the program in Senate floor action and House committee markup. Introduced bills and other
proposals form the basis for amendments expected to be offered. S. 25 would phase out sugar
loan rates in stages through the 2014 crops, and eliminate all price support beginning in 2015.
The text of this bill was offered as an amendment during Senate floor debate on June 13, and
tabled (i.e., rejected) on a 50-46 vote. Other pending bills, S. 685/H.R. 1739; Title I, Subtitle C, of
identical bills S. 1658/H.R. 3111; H.R. 1385; and Section 521(a) of identical bills H.R. 408/S.
178, would repeal all sugar price support provisions immediately or starting with the 2013 crops.
All eight introduced bills would repeal all statutory authorities pertaining to sugar marketing
quotas and allotments, payments made to processors to store sugar forfeited to the U.S.
Department of Agriculture (USDA), storage facility loans, and the feedstock flexibility program
for bioenergy producers (i.e., the sugar-to-ethanol) program. However, they differ in changes
proposed to the sugar import quota. Some bills would require that each year’s import quotas for
raw cane sugar and refined sugars be set to ensure “an adequate supply of sugar at reasonable
prices in the United States.” By contrast, the other measures would go further and completely
eliminate all U.S. tariffs on sugar imports as well as the quota-setting authority administered by
USDA and the U.S. Trade Representative. Pending S.Amdt. 2433 to S. 3240 would return price
support loan rates to 2008 levels, and require USDA to administer the sugar import quota and
marketing allotments to provide “adequate supplies of sugar at reasonable prices.”
Congressional Research Service
Sugar Program Proposals for the 2012 Farm Bill
Contents
Overview of Sugar Program ............................................................................................................ 1
Supporters of Sugar Program........................................................................................................... 1
Opponents of Sugar Program........................................................................................................... 2
Legislative Activity in the 112th Congress ....................................................................................... 2
Senate Farm Bill Activity .......................................................................................................... 2
House Farm Bill Activity........................................................................................................... 3
Bills Introduced by Program Opponents ................................................................................... 4
Contacts
Author Contact Information............................................................................................................. 5
Congressional Research Service
Sugar Program Proposals for the 2012 Farm Bill
Overview of Sugar Program
The U.S. sugar program is up for renewal this year as Congress considers the future of all farm
commodity programs in the context of the omnibus 2012 farm bill. As now structured, the sugar
program provides a price guarantee to producers of sugar beets and sugarcane and to the
processors of both crops. The U.S. Department of Agriculture (USDA) further is directed to
administer the program at no budgetary cost to the federal government by limiting the amount of
sugar supplied for food use in the U.S. market. To achieve both objectives, USDA has four
available tools—authorized by the 2008 farm bill (Food, Conservation, and Energy Act of 2008,
P.L. 110-246, Subtitle D of Title I) and Chapter 17 of the Harmonized Tariff Schedules of the
United States—to keep domestic market prices above guaranteed levels. These are:
• extending price support loans at specified levels (the basis for the price
guarantee);
• setting marketing allotments to limit the amount of sugar each processor can sell;
• establishing import quotas to restrict the amount of sugar allowed to enter the
U.S. market; and
• making a sugar-to-ethanol backstop available if marketing allotments and import
quotas are insufficient to prevent a sugar surplus from developing.
For an explanation of how these tools operate together, see CRS Report R42535, Sugar Program:
The Basics.
Supporters of Sugar Program
Producers of sugar beets and sugarcane, and the beet refiners and raw sugar mills that process
these crops into refined sugar and raw cane sugar, respectively, advocate extending the U.S. sugar
policy that Congress adopted in the 2008 farm bill. Spokesmen argue that the program has
succeeded in ensuring “reliable supplies of high-quality, safe, responsibly-produced sugar at
reasonable prices” for consumers, and provided producers “an economic safety net.” They
emphasize that these objectives have been achieved at “zero cost to American taxpayers.”1 Sugar
crop producers and processors are represented by the American Sugar Alliance (ASA).
Two large general farm organizations support continuing the current sugar program. The
American Farm Bureau Federation states that while other commodities will be faced with reduced
government support in the next farm bill, “the sugar program should be left intact as efforts to
generate savings would require convoluted policy structures.” The National Farmers Union
supports continuing the sugar program and “encourages Congress to work with ... sugar producers
to adopt a strong sugar program in future farm bills.” Also, a coalition of 17 developing countries
that benefit from preferential quota access to the U.S. sugar market favor continuing current U.S.
sugar policy, arguing that it “provides a guaranteed level of access ... at fair, predictable prices.”2
1 American Sugar Alliance, statement submitted to the House Agriculture Committee’s Subcommittee on General Farm
Commodities and Risk Management, hearing on “Formulation of the 2012 Farm Bill: Commodities & Crop Insurance,”
May 17, 2012, accessed at http://www.sugaralliance.org/images/stories/PapersAndTestimony/ASA-HAC-testimony-5-
12.pdf.
2 American Farm Bureau Federation, “Policy Recommendations for the 2012 Farm Bill,” September 28, 2011, p. 5,
(continued...)
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Sugar Program Proposals for the 2012 Farm Bill
Opponents of Sugar Program
Sugar users (i.e., manufacturers of sugar-containing food products and beverages) are proposing
changes to the U.S. sugar program. In their view, the sugar program “was made worse by the
2008 farm bill” and operates as “a textbook example of the consequences of excessive
government intrusion in the marketplace.” They argue that the program, “by overly restricting the
supply of sugar in the U.S. market,” has kept U.S. market sugar prices “far above” world sugar
prices. This development, they contend, has resulted in U.S. consumers and food manufacturers
paying more for sugar than foreign users do, encouraged the relocation of food processing jobs
offshore, led to the elimination of thousands of U.S. jobs, and created a “dramatic inequity of the
benefits provided to sugar growers over other agricultural producers” supported by other
commodity programs.3
Sugar users are primarily represented by the Coalition for Sugar Reform (CSR). CSR includes the
food and beverage companies that use sugar (e.g., confectionery firms, bakeries, cereal
manufacturers, beverage makers and dairy companies, and the trade associations for these
industries), consumer and trade advocacy groups, and business organizations. Two trade
associations representing food manufacturing firms where sugar is a principal input have placed
U.S. sugar policy at the top of their legislative agenda. They are the American Bakers Association
and the National Confectioners Association.4
Legislative Activity in the 112th Congress
Senate Farm Bill Activity
The Senate Agriculture Committee, in approving its farm bill (S. 3240) on April 26, 2012,
reauthorized the current sugar program without any change through crop year 2017 (Section 1301
of the Agriculture Reform, Food, and Jobs Act of 2012). The committee also reauthorized the
sugar-to-ethanol program in the bill’s Energy title (Section 9009). Senate leadership has indicated
that this bill will be considered on the Senate floor in June.
The American Sugar Alliance noted that the committee “overwhelmingly agreed that America’s
popular no-cost sugar policy should be continued.” It added: “This is great news” for those
employed in the sugar sector, for U.S. food security, and for taxpayers who will benefit from an
“ample and affordable” sugar supply without government cost.5
(...continued)
accessed at http://www.fb.org/issues/FarmBureauRecommendations110928.pdf; National Farmers Union, 2012 NFU
Policy, adopted by delegates at their March 2012 convention, accessed at http://www.nfu.org/policy-nfu/218-article-i/
973-e-commodities#anchor5; ASA, “Developing Nations Reaffirm Sugar Policy Support, Praise Farm Bill,” May 21,
2012, accessed at http://www.sugaralliance.org/newsroom/developing-nations-reaffirm-sugar-policy-support-praise-
farm-bill.html.
3 Coalition for Sugar Reform, statement submitted to the House Agriculture Committee’s Subcommittee on General
Farm Commodities and Risk Management, hearing on “Formulation of the 2012 Farm Bill: Commodities & Crop
Insurance”, May 17, 2012, accessed at http://sugarreform.org/wp-content/uploads/2011/06/CSR-House-Ag-Testimony-
May-17-2012-FINAL-.pdf.
4 American Bakers Association, “Sugar Program Reform,” accessed at http://americanbakers.org/issues/sugar/; CSR,
“Message from the Chairman”—President, National Confectioners Association, accessed at http://sugarreform.org/
about/message-from-the-chairman/.
5 ASA, “Senate Agriculture Committee Continues No-Cost Sugar Policy,” April 26, 2012, accessed at
(continued...)
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Sugar Program Proposals for the 2012 Farm Bill
The Coalition for Sugar Reform expressed “disappointment” that the committee extended the
“outdated and anticompetitive U.S. sugar support program.” It views the program as forcing
“U.S. sugar-using industries to pay 50 percent or more above the world price for sugar, at the
direct expense of U.S. consumers and jobs.”6
Senator Lugar had signaled that he would offer an amendment on the sugar program during
committee markup, but subsequently announced that he will instead offer an amendment when
the farm bill comes up for Senate floor debate.7 He since has joined other Senators who plan to
offer an amendment to modify current program authority during that debate.
On June 13, 2012, the Senate tabled S.Amdt. 2393 to S. 3240, offered by Senator Reid for
Senator Shaheen, on a 50-46 vote. It would have phased out the sugar program within three years
and required USDA to administer the sugar import quota to ensure an adequate U.S. sugar supply
“at reasonable prices” and a “robust and competitive” sugar processing sector. This amendment’s
text is virtually identical to that found in S. 25 (see below for details).
Two other sugar amendments to the Senate farm bill are expected to be considered, now that
Senate leadership has secured unanimous consent on how to proceed to debate 73 pending
amendments. S.Amdt. 2433 to S. 3240, offered by Senators Toomey, Shaheen, and Lugar, would
retain but modify the sugar program’s price support, marketing allotment, and import quota
provisions. Loan rates would be lowered from current FY2012 levels (18.75 ¢/lb. for raw cane
sugar, 24.09 ¢/lb. for refined beet sugar) to about the levels in effect in FY2008 (18.0 ¢/lb. for
raw cane sugar, and 22.9 ¢/lb. for refined beet sugar). Other changes would require USDA to
administer marketing allotments in ways that ensure that supplies of sugar (including imports)
result in “reasonable prices.” It would grant USDA discretionary authority to suspend or modify
any marketing allotment provision, taking into account the interests of consumers, those
employed in the food production sector, businesses, and agricultural producers. This proposal also
would require USDA to exercise discretion in administering the sugar import quota—for
example, by allowing for adjustments in quota levels to provide for adequate sugar supplies at
reasonable prices. Another provision would require USDA to set the ending sugar stocks-to-use
ratio at about 15.5%, but with authority to adjust this target to prevent “unreasonably” high prices
or loan forfeitures. Another provision would repeal the sugar-to-ethanol program. S.Amdt. 2340
filed by Senator Chambliss would allow USDA to decide earlier in the year whether to increase
the quantity of foreign raw sugar allowed to enter the U.S. market under an import quota, by
advancing the window to do so from April 1 to February 1.
House Farm Bill Activity
The House Agriculture Committee concluded its farm bill hearings on May 18, and reportedly
will mark up its farm bill in June. The committee chairman and ranking Member have stated their
support for continuing the sugar program without any change and their desire to move quickly in
light of the expiration of most farm bill programs in 2012.
(...continued)
http://www.sugaralliance.org/newsroom/Senate-Agriculture-Committee-Continues-No-Cost-Sugar-Policy.htm.
6 CSR, “Costly Sugar Policy Receives Rubber Stamp Approval by Senate Agriculture Committee,” April 26, 2012,
accessed at http://sugarreform.org/wp-content/uploads/2011/07/CSR-Release-Senate-AG-Markup-FINAL-4-26-12.pdf.
7 Press release issued by Senator Lugar, “Lugar Vows to Offer Sugar Program Amendment on Senate Floor,” April 26,
2012, accessed at http://www.lugar.senate.gov/record.cfm?id=336640&.
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Sugar Program Proposals for the 2012 Farm Bill
Two House Members have signaled that if the Agriculture Committee “fails to undertake
significant reform of the sugar program,” they “will be left with no other option than to offer
House floor amendments to the farm bill to achieve sugar policy reform.”8
Bills Introduced by Program Opponents
To date, Members have introduced eight measures that would make significant changes to U.S.
sugar policy. S. 25 (Stop Unfair Giveaways and Restrictions Act of 2011, introduced by Senator
Shaheen) would phase out in stages the loan rates for the 2012-2014 crops from sugar beets and
sugarcane. Price support would not be available for the 2015 and subsequent crop years. Price
support during the three-year transition period would only be available in the form of “recourse”
loans, meaning cash repayment irrespective of the market price (even if lower than the loan rate)
when repaid. S. 685/H.R. 1739 (Free Sugar Act of 2011, introduced by Senator Lugar and
Representative Dold, respectively) would repeal all sugar price support provisions, effective with
the 2012 crops. Title I, Subtitle C, of S. 1658/H.R. 3111 (Rural Economic Farm and Ranch
Sustainability and Hunger [REFRESH] Act, a comprehensive farm bill proposal introduced by
Senator Lugar and Representative Stutzman, respectively) would repeal all sugar price support
provisions, effective with the 2013 crops. One amendment that Senator Lugar considered offering
during Senate Agriculture Committee markup is virtually identical to the sugar program repeal
provisions in S. 1658. H.R. 1385 (Free Market Sugar Act, introduced by Representative Pitts) and
Section 521(a) of H.R. 408/S. 178 (introduced by Representative Jordan and Senator DeMint,
respectively) would immediately repeal all sugar price support provisions.
All eight bills would repeal all statutory authorities pertaining to sugar marketing quotas and
allotments, payments made to processors to store sugar forfeited to the USDA, storage facility
loans, and the feedstock flexibility program for bioenergy producers (i.e., sugar-to-ethanol)
program. However, they differ in the changes proposed to the sugar import quota.
S. 25, H.R. 1385, and Section 521(b) of H.R. 408/S. 178 would require USDA to establish each
year’s import quotas for raw cane sugar and refined sugars to ensure “a robust and competitive
sugar processing industry in the United States” and “an adequate supply of sugar at reasonable
prices in the United States.” To meet these objectives, USDA is directed to consider five factors
that take into account U.S. food demand for sugar, sugar production, carryover stocks from the
previous year, the “quantity of sugar that would provide for reasonable carryover stocks” at the
end of the marketing year, and U.S. import obligations made under trade agreements. By contrast,
S. 685/H.R. 1739 and S. 1658/H.R. 3111 would go further and completely eliminate all U.S.
tariffs on sugar imports as well as the quota-setting authority administered by USDA and the
U.S. Trade Representative. In other words, the United States would no longer restrict imports of
sugar from foreign countries granted most-favored-nation trade status.
8 Rep. Joe Pitts and Rep. Danny Davis, “Sugar Caucus Co-Chairs Submit Joint Testimony—Urge Agriculture
Committee to Change Sugar Program,” May 17, 2012, accessed at http://davis.house.gov/index.php?option=
com_content&task=view&id=325&Itemid=1.
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Sugar Program Proposals for the 2012 Farm Bill
Author Contact Information
Remy Jurenas
Specialist in Agricultural Policy
rjurenas@crs.loc.gov, 7-7281
Congressional Research Service
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