Date: 1982-08-12
Speaker: IT COSTS (republican)
Chamber: S

Too MUCH (By Nicholas Kominus) H. L. Mencken may have had the sugar producer in mind when in an essay entitled "The Husbandman" he wrote: "When the going is good for him he robs the rest of us up to the extreme limit of our endurance. when the going is bad he comes bawling for help out of the public till." In 1980. when the world price of sugar shot up. the nations sugar producers did not hesitate to increase their own prices. As a result. they enjoyed record profits. But. as much as the producers enjoy riding the world market up. they hate riding it down. So last year they came to Washington. lobbying for help. Unfortunately. they got .helpmuch help. The sugar program that emerged is dreadfVI. The producers got the program. in part. by resorting to scare tactics. They argued that the program was needed to protect consumers from a socalled "sugar OPEC." This was nonsense. Sugar. unlike petroleum. is produced in practically every nation of the world. and substitutes are available. At the time. some were impressed by the argument. But the recent drop in the world price of sugar from 44 to 8 cents a pound has put the "sugar OPEC" argument to rest. Meanwhile. consumers are stuck with a program that is artifically forcing up the price of sugar. and thereby contributing to the disturbing reappearance of inflation. As the price of sugar goes up. it inflater the price of many processed foods and Leverages. When President Reagan implemented the current sugar price support program. he said. "I personally regret the necessity for signing these proclamations. The sugar program enacted by Congress to protect highercost domestic producers will result in higher costs for all American sugar consumers." The program is. indeed. forcing American consumers to pay more for sugar than consumers in most of the other nations of the world. * Today. the price of raw sugar on the world market is around 8 cents a pound. a result of overproduction in the United States and other parts of the world. Despite producer attempts to discredit it. the world sugar market is not a dumping ground. It is a viable and important market. which accounts for as large a percent of total sugar trade as do the world markets for wheat. feed grains and soybeans. The United States price. which is forced up by import quotas. duties and fees. is around 22 cents. or nearly three times higher than the world price. By artificially maintaining the United States price that high the program is costing consumers an estimated $3 billion a year in higher sweetener costs. That price tag becomes even more significant when it is measured against the small number of sugar producers. There are. in fact. fewer than 14.000 sugar producers. Thus. the cost of the $3 billion program is an astounding $215.000 per producer. By comparison. the annual cost of the dairy program. in which 324.000 producers participate. is estimated to be $11.250 per producer. The wheat program. In which 879.000 producers participate. is estimated to cost $475 per producer. It is also interesting to note that the school lunch program costs $113 a year per child. and that the food stamp program costs $622 per participant. S 10398 . The sugar producers enjoy these lopsided Government benefits without any strings attached. Unlike the other crop programs. they can produce all they want. In addition. huge sugar producers get to "play" with the taxpayers money. Under the program. they can offer sugar to the Government as collateral for loans and these loans are expected to total around $1 billion in the coming crop year. Producers can reinvest the loan money in money markets. as some have in the past. rea! ing windfalls from the spread between the ow interest rates charged by the Govcrnment and the currently high market rates. Moreover. if producers decide to default. they pay no interest. The sugar program is also proving to be a total embarrassment to the Reagan Administration. which has been forced to impose restrictive import quotas in order to avoid the possibility of the Government having to buy domestically produced sugar. The quotas have been a cause of no small irritation in the developing sugar nations. most of which are in the Caribbean and Latin America. And the quotas have all but decimated the Administrations Caribbean Basin initialve. More important. the quotaproblem transcends the sugar trade. It could have a serious impact upon our foreign trade generally. Sugar quotas will. as special trade representative William E. Brock said. "make it more difficult" to argue against trade barriers in the European Economic Community and Japan. As long as the quotas remain in force. every nation we have.a trade problem with will gleefully point to them as an example of our transgressions. It is ludicrous to jeopardize our $42 billion agricultural export trade to overprotect a minor industry. The sugar beet and cane crops are produced on less than 1 percent of the nations farms. and they account for less than 1 percent of crop acreage. Ironically. the sugar program is pricing sugar out of the sweetener market. High sugar price supports are permitting the corn sweeteners to capture more of sugars traditional markets. As a result. some sugar refineries and factories are closing. In recent months. all Government pro. grams have been reexamined. and Government benefits to millions of Americans have been reduced. Sugar and its producers should be no exception. [From the Honolulu StarBulletin. July 28.