Last week, as the U.S. House considered its twice-a-decade Farm Bill, Minnesota’s sugar growers got the challenge they had been expecting for years: an amendment, filed to the massive nutrition and agriculture bill, that would “reform” and “modernize” the federal sugar subsidy program.
The government’s system to protect the domestic sugar-growing industry, which is not based on direct subsidies but a complex set of measures designed to keep the price of sugar high, has been around for decades, and farmers credit it with shielding their business in the face of an uncertain global market.
But the program has recently become a huge target for a diverse coalition of interests that loathe it — particularly, food companies who believe the policy inflates the price of sugar and hurts their businesses. “Modernizing” the sugar program, in the eyes of this camp, means undoing government protections and opening up the domestic sugar industry to market forces.
An amendment to the 2014 Farm Bill to do that failed; this year’s amendment, filed by Republican Rep. Virginia Foxx of North Carolina, was regarded as perhaps the most serious threat yet to the sugar program: She found a broad cross-section of Democratic and Republican backers, and told reporters she believed the amendment had enough votes to be adopted.
Ultimately, though, the roll call vote on Thursday evening wasn’t even close: The House rejected the amendment, 278 no votes to 137 yes votes, in a show of support for the sugar program, and a display of the enduring strength of the sugar lobby, one of the most influential in Washington.
Minnesota’s sugar industry — one of the largest of any state in the country — is breathing a sigh of relief, as are its many supporters in Washington. People who want to see Washington’s support of sugar farmers curbed, meanwhile, are forced back to the drawing board after an all-out blitz to win over Capitol Hill.
A finely tuned program
Federal policy to protect sugar growers is as old as the Great Depression, but the emergence of a viable coalition determined to change it is a relatively new phenomenon.
Taxpayer organizations like the National Taxpayers Union and conservative groups like the Heritage Foundation have long opposed crop commodity programs, particularly the sugar program, arguing that they are backward, anti-free-market policies that help narrow interests at the expense of most Americans.
Powerful corporate interests — chiefly, food, beverage, and candy companies known as the “sugar users” — believe they are stuck with the bill for protecting the sugar industry, and cite studies claiming that it costs them jobs and costs consumers more at the checkout register when they buy products that contain sugar.
Foxx’s amendment is a representation of those viewpoints. Though it did not aim to totally undo the sugar program, it made tweaks to the system that observers say would have made the whole thing unworkable.
The sugar program relies on a finely tuned balance of policies in order to maintain a steady sugar price, which is its primary objective. It mandates a minimum price for sugar, which is currently 24 cents a pound; if the market price goes below that threshold, growers can sell their product to the U.S. government at the guaranteed rate. (In the U.S., the current price for raw, unrefined sugar is 26.6 cents per pound.)
In only one year out of the last 15 have sugar prices fallen below that federally mandated floor: in 2013, when several factors came together to crater the global price of sugar. The U.S. government ended up buying about $300 million worth of domestic sugar that year, and then did the only thing the program allows it to do with the product: made it into ethanol fuel.
To ensure that kind of substantial loss only happens rarely, the U.S. Department of Agriculture strictly limits the amount of sugar U.S. producers can sell, and it controls how much foreign sugar can enter the U.S. market. Only about 15 percent of domestic sugar demand is met with imports, and the government works hard to ensure there is no oversupply in the domestic market.
Supporters of the program often say it comes at zero cost to taxpayers and that if it were weakened or abolished, the U.S. market would flood with cheap imports — putting farmers out of business, and destroying an economic lifeline for corners of rural America . Over 28,000 jobs in Minnesota are supported by the sugar industry, and it registers $3.3 billion in economic impact, according to the American Sugar Alliance, a trade group for sugar growers.
The Foxx amendment would have lowered the guaranteed sugar rate to the level it was at in 1985, costing sugar growers $20 per ton of sugar — adding up to $180 million a year for the domestic industry, said Jack Roney, director of policy analysis at the American Sugar Alliance. The amendment also would have given the USDA a much freer hand to increase the flow of foreign sugar into the U.S. market.
According to Skip Taylor, a retired agricultural economist who studied the sugar beet industry for decades at North Dakota State University, said the U.S. industry could not compete if cheaper foreign sugar came in from Brazil or Mexico.
“That is the flat-out, rock bottom analysis,” he said. “They have to maintain their subsidies, they have to maintain import quotas, or else they will not survive. That’s what they’re fighting.”
Reformers sense an opportunity
Ahead of Thursday’s vote, Foxx’s amendment picked up steam. Capitol press identified sugar as a potential sticking point for the entire farm bill, the sugar users waged an aggressive PR campaign and lawmakers took to the House floor to denounce the sugar program for a variety of reasons.
Before the vote, GOP Rep. Scott Perry of Pennsylvania denounced the sugar program as an “anti-free-market scheme;” GOP Rep. Mark Sanford of South Carolina said it was unwise to subsidize things “giving us trouble” — like sugar, which he linked with high health care costs to treat type 2 diabetes. Democratic Rep. Earl Blumenauer of Oregon raged against Florida’s cane sugar industry and its environmental impact on the Everglades.
Meanwhile, Minnesota’s sugar industry and its allies in Congress were sweating. In the 2014 Farm Bill process, a similar amendment to Foxx’s failed by nine votes in the Senate. In the intervening years, the sugar reform camp has poured more money and resources into its campaign to sway opinion in D.C. and in the general public against the sugar program; key interests like the National Confectioners Association have stepped up their spending on congressional campaigns.
That persistence, combined with a D.C. environment more dominated by conservatives who favor changes to the sugar program, gave reformers perhaps their best shot yet.
The Sugar Alliance’s Roney said the reform camp “basically sees an opportunity with a relatively more conservative Congress than we’ve seen in years past, and less affinity for government programs in general.”
But he was optimistic that lawmakers would see the light. So, too, was Kevin Price, lead lobbyist in Washington for American Crystal Sugar, the Moorhead-based cooperative that is a giant of the sugar world, and an economic engine for the Red River Valley, the most productive sugar-beet-growing area of the country.
Price spoke to MinnPost as he was hustling through the tunnels of the U.S. Capitol ahead of the amendment vote. “We’re having a higher-profile debate on sugar this time around,” Price said. “As history has shown, Congress generally approves farm bills, and the sugar policy along with that, and that’s because it makes sense. More people agree with us than disagree with us. … We’ll continue to hopefully enjoy good support going forward.”
Hours later, that hope was affirmed when the Foxx amendment resoundingly went down in defeat. Of the 137 members who voted yes, over two-thirds were conservative Republicans. The 278 no votes included the entire Minnesota congressional delegation, and close to the entire delegations of Louisiana and Florida, the two leading producers of cane sugar.
After the vote, 7th District DFL Rep. Collin Peterson — the top Democrat on the House Ag Committee and the so-called “godfather” of the sugar beet industry — was all smiles as he looked over the House floor. In a statement after the vote, Peterson said “we fight this battle every Farm Bill, it seems, and the facts haven’t changed. The sugar program helps to support sugar beet growers across the region and sugar producers across the country.”
Staving off disaster — for now
That the amendment failed by such a wide margin is a testament to how much sway the sugar growers’ lobby still holds. American Crystal Sugar, along with peers in the beet and cane sugar-growing businesses, have directed many millions of dollars over the years to congressional campaigns and lobbying efforts in D.C.
American Crystal Sugar alone has given over $600,000 to Minnesota members of Congress in the past decade, and has contributed nearly $2 million to campaigns nationwide in the 2018 cycle so far. Sugar growers have also been known to work against adversaries in Congress who don’t share their agenda.
The Alliance for Fair Sugar Policy — an umbrella group representing interests committed to reforming the program — condemned the amendment’s fate as a symptom of D.C. special interest politics.
“The vote count on the Foxx amendment reflects politics as usual in Washington – from backroom deals to bitter partisanship on major pieces of legislation,” the group said in a statement. “This vote does not reflect the thousands of small businesses, newspaper editorial boards and taxpayer watchdog, consumer protection and environmental groups that have called on Congress to modernize the sugar program.”
“It is disappointing that some members of Congress fell for the misinformation, scare tactics and highly charged, exaggerated rhetoric floated by the handful of sugar mega-processors that benefit from the complicated and messy sugar program.”
“It’s maybe a little more boring than the other side is trying to make it,” Price said in response to the Alliance for Fair Sugar Policy’s statement. “We don’t spend our time trying to conjure up theories about what happened. We spend our time day-to-day just trying to make the case for why the sugar policy makes sense, why Congress ought to support it, and the vote tally is a result of several years of hard work.”
Price said that there were 140 House members voting on this amendment who were not in office during the last Farm Bill process — which means he and his colleagues were hard at work the past few years. “We’re pleased that when the time came, that work we’d done in preceding years to build relationships and explain the sugar policy hit home in the way we’d hoped.”
Despite their setback, the food and beverage companies, business interests, and taxpayer associations behind the anti-subsidy push are vowing to continue the fight. The Senate has yet to mark up its version of the Farm Bill, and there are 20 sponsors for legislation in that chamber to curb the sugar program.
Taylor, the sugar beet industry expert, said that the industry may have dodged the bullet this year, but predicted the sugar program will fall apart sooner or later.
“Eventually, it’s going to come,” he said. “This farm bill, or in five years.”