Sugar Program Proposals for the Next
Farm Bill
Remy Jurenas
Specialist in Agricultural Policy
January 14, 2013
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 Next 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. raw 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
pointed 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 also support this position.
During 2012, Congress considered the future of the sugar program in deliberating agricultural and
food assistance policy but did not complete action on a new farm bill. Instead, Section 701 of P.L.
112-240 (the “fiscal cliff” bill) extends the 2008 farm bill’s commodity program authorities for
one year. This means current sugar program authority will apply to the 2013 sugar crops (i.e.,
most of FY2014 as beets and cane are processed and sugar is marketed). Earlier, the Senate–
passed farm bill (S. 3240) would have reauthorized the current sugar and sugar-to-ethanol
programs with one change through crop year 2017. Adopted by voice vote, it would have
advanced by two months the U.S. Department of Agriculture’s authority to increase the raw sugar
import quota. Two amendments to phase out or modify both programs were defeated on roll call
votes. The House Agriculture Committee farm bill (H.R. 6083), marked up on July 11, 2012,
would have reauthorized both programs without any change. An amendment offered in markup to
modify the program was defeated on a 36-10 vote. No floor action occurred on this House bill.
Other bills and proposals formed the basis for sugar program amendments offered on the Senate
floor, and were expected to be offered during House floor debate. These reflected changes sought
by opponents of current U.S. sugar policy. The text of S. 25 (to phase out sugar loan rates in
stages through the 2014 crops, and eliminate all price support beginning in 2015) was offered as
S.Amdt. 2393 during Senate floor debate on June 13, and tabled (i.e., rejected) on a 50-46 vote.
S.Amdt. 2433 to S. 3240 (defeated 46-53) proposed to return price support loan rates to 2008
levels, and to require USDA to administer sugar import quotas and marketing allotments to
provide “adequate supplies of sugar at reasonable prices.”
Other bills introduced in the House mirrored the amendments offered during Senate floor debate.
They would have repealed all sugar price support provisions either immediately or starting with
the 2013 crops, but differed in changes proposed to sugar import quotas.
Debate on U.S. sugar policy will continue once decisions are made on how to proceed with a new
farm bill. Supporters and opponents are expected to make similar arguments as presented in 2012.
Congressional Research Service
Sugar Program Proposals for the Next Farm Bill
Congressional Research Service
Sugar Program Proposals for the Next 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 ........................................................................................................... 4
Bills Introduced by Program Opponents ................................................................................... 4
Sugar Program Extension .......................................................................................................... 5
Outlook in 113th Congress ............................................................................................................... 6
Contacts
Author Contact Information............................................................................................................. 6
Congressional Research Service
Sugar Program Proposals for the Next Farm Bill
Overview of Sugar Program
The U.S. sugar program is up for renewal as Congress considers the future of all farm commodity
programs in the context of the next omnibus 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 keep market prices above guaranteed levels.
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 favors 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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Opponents of Sugar Program
Sugar users (i.e., manufacturers of sugar-containing food products and beverages) support making
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, would
have reauthorized the current sugar program without any change through crop year 2017 (§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 (§9009).
On June 21, 2012, the Senate approved the farm bill as amended on a 64-35 vote. During earlier
floor debate, three amendments to the sugar price support/supply management and sugar-to-
ethanol programs were considered. Two were defeated; the other was adopted. These are
described below.
(...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/.
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On June 13, 2012, the Senate tabled (i.e., rejected) 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 sugar import quotas 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).
On June 20, 2012, the Senate defeated on a 46-53 vote S.Amdt. 2433 to S. 3240, offered by
Senators Toomey, Shaheen, and Lugar. It would have retained but modified the sugar program’s
price support, marketing allotment, and import quota provisions. Loan rates would have been
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 have required USDA to administer marketing
allotments in ways that ensure that supplies of sugar (including imports) result in “reasonable
prices.” The amendment would have granted 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 have required 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 have required 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 have repealed the sugar-to-ethanol program.
On June 20, 2012, the Senate adopted by voice vote S.Amdt. 2340 to S. 3240 filed by Senator
Chambliss. Section 1301(b)(2) of the Senate-passed farm bill would have allowed 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. Currently, at the beginning of each marketing year (October 1), USDA must set the
quotas for raw cane and refined sugar at the minimum level (1.256 million tons) necessary to
comply with U.S. trade commitments under the World Trade Organization. In case there is an
emergency sugar shortage (caused by adverse weather or war) before April 1 of any year, USDA
is required to increase these quotas earlier. If there is no such emergency, USDA must wait until
April 1 (the midpoint of the marketing year) before deciding whether or not to increase the raw
sugar quota. The amendment’s intent was to give USDA the authority to make this decision to
allow additional imported sugar to enter earlier in the year, in order to enable a cane refinery in
Savannah, GA, that relies upon imports to more fully utilize its installed capacity.
Upon Senate farm bill passage, the American Sugar Alliance applauded the efforts of its Senate
supporters to beat back two amendments proposed “to increase large food makers’ already
sizeable profits at agriculture’s expense.” In rebuffing them, “the Senate said no to outsourcing
America’s sugar needs; it said no to killing U.S. sugar jobs; and it said no to eviscerating a
successful policy that operates without taxpayer cost.”5
Reacting to the defeat of the Toomey amendment, the Coalition for Sugar Reform expressed
disappointment “the Senate voted to maintain the status quo.” It highlighted that “the closest
Senate vote in decades” signals broad bipartisan support for a change and that the sugar program
5 ASA, “ASA Statement On Senate Farm Bill Passage,” June 22, 2012, accessed at http://www.sugaralliance.org/
newsroom/asa-statement-on-senate-farm-bill-passage.html.
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“has long outlived its usefulness.” Calling this action “far from a ‘done deal’,” CSR viewed
upcoming House consideration “as an opportunity to build on the widespread support for reform”
and to openly debate “the costs of ... and the merits of [program] reform.”6
House Farm Bill Activity
The House Agriculture Committee concluded its farm bill hearings on May 18, and marked up its
farm bill (H.R. 6083) on July 11. Section 1301 of the Federal Agriculture Reform and Risk
Management Act of 2012 would have reauthorized the current sugar program without any change
through crop year 2017. Section 9009 in the Energy title would have reauthorized the sugar-to-
ethanol program through 2017. The committee chairman and ranking Member 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.
Two House Members earlier 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.”7 During committee
markup, Representative Goodlatte offered an amendment identical to S.Amdt. 2433 to the Senate
farm bill (see above for description). This amendment would have eliminated many of the
changes made to the sugar program in the 2008 farm bill,8 reverted authorities to what they were
during the 2003-2008 period, and required USDA to keep “reasonable sugar prices” in mind as
program decisions are made. The committee rejected the Goodlatte amendment, on a 10-36 roll
call vote.
As it became evident during July that the House would not consider its farm bill before the
August recess, House leadership attempted to move another bill to the floor to extend most farm
bill programs for one year and to make agricultural disaster assistance available to livestock
producers. Among its provisions, H.R. 6228, introduced by Representative Lucas would have
extended current authorities for the sugar and sugar-to-ethanol programs to apply to the 2013
sugar beet and sugarcane crops. On July 31, the House Rules Committee planned to recommend a
closed rule for debate (i.e., no floor amendments). However, widespread opposition to this
measure prompted leadership instead to shift its strategy to proceed with a more limited measure
(H.R. 6233) focused on providing disaster assistance to livestock producers.
Bills Introduced by Program Opponents
In the 112th Congress, Members introduced eight free-standing measures that would have made
significant changes to U.S. sugar policy. The Senate in debating the farm bill considered the
substance of some or all of the provisions in these bills. Opponents signaled their intent to pursue
comparable changes when the farm bill moved to the House floor. S. 25 (Stop Unfair Giveaways
6 CSR, “Coalition Disappointed with Close Senate Vote Rejecting Modest Reforms to Costly U.S. Sugar Program,
Urges House to Have the Courage to Change Course,” accessed at http://sugarreform.org/wp-content/uploads/2011/07/
CSR-Release-Floor-Vote-2433-6-20-12-FINAL.pdf,
7 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.
8 For background, see CRS Report RL34103, Sugar Policy and the 2008 Farm Bill, by Remy Jurenas.
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Sugar Program Proposals for the Next Farm Bill
and Restrictions Act of 2011, introduced by Senator Shaheen) would have phased out in stages
the loan rates for the 2012-2014 crops of sugar beets and sugarcane. Price support would not have
been available for the 2015 and subsequent crop years. Price support during the three-year
transition period would have only been 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 have repealed 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 have repealed all sugar price support
provisions, effective with the 2013 crops. One amendment that Senator Lugar considered offering
during Senate Agriculture Committee markup was 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 have immediately repealed all sugar price support provisions.
All eight bills would have immediately repealed 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 differed in the changes proposed to sugar import
quotas.
S. 25, H.R. 1385, and Section 521(b) of H.R. 408/S. 178 would have required 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 would have been
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 have gone
further and completely eliminated 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.
Sugar Program Extension
Efforts within Congress to complete action on an omnibus farm bill after the November 2012
elections did not succeed. In late December, attention shifted to finding a legislative vehicle to
extend existing authorities for agricultural commodity programs, including sugar. At the last
minute, congressional leadership decided to use the “fiscal cliff” bill to simply extend many 2008
farm bill provisions through September 30, 2013. Among its provisions, Section 701(a) and (b) of
P.L. 112-240 extends the 2008 farm bill’s commodity program authorities for one year. This
means current sugar program authority will apply to the 2013 sugar crops (i.e., most of FY2014,
as beets and cane are harvested and processed and sugar is subsequently marketed). Separately,
Section 701(f)(9) provides authority, if triggered, for USDA to implement the sugar-to-ethanol
program for the 2013 sugar crops.
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Outlook in 113th Congress
Observers expect the Agriculture Committees to begin the process of crafting another omnibus
farm bill, though the timetable to do so has not yet been established. The Senate-passed and
House-reported farm bills from the last Congress likely will be used as the starting points for
drafting new legislation. When, and how, the committees proceed is likely to be influenced by
congressional efforts to address sequestration and broader spending issues in the next few
months, and by the budget baseline for commodity programs that the Congressional Budget
Office will release in March.
In turn, these events will determine when debate on the future of U.S. sugar policy resumes.
When that occurs, supporters and opponents of the current sugar program can be expected to lay
out arguments similar to those made during last year’s consideration of the farm bill.
Author Contact Information
Remy Jurenas
Specialist in Agricultural Policy
rjurenas@crs.loc.gov, 7-7281
Congressional Research Service
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