In testimony before the House Agriculture Committee today, a representative of the domestic sugar industry outlined four policy objectives that are needed to assure reliable supplies and price stability of sugar for consumers and producers.

Ray VanDriessche, a farmer from Bay City, Michigan, and current president of the American Sugarbeet Growers Association, also said the policy objectives would, among other things, "protect taxpayers by generating all sugar producer income from the marketplace," and not rely on the government for income.

VanDriessche said, "Our industry has worked very hard to review many options to achieve these four objectives, and we strongly support the following basic elements" as the House Agriculture Committee begins deliberation of the 2002 Farm Bill:

    (1) Continue the non-recourse loan program for sugar, the same as it is
        for other agricultural commodities.
    (2) Retain the Secretary of Agriculture's authority to limit imports under
        the tariff-rate quota system.
    (3) Operate the sugar program at little or, preferably, no cost to the
        government.
    (4) Resume the government-administered inventory management mechanism
        similar to that contained in the 1990 Farm Bill, but only implemented
        once our import-quota circumvention and Mexican import-access problems
        are solved.

VanDriessche said, "We want to emphasize the industry's support for inventory management. However, it must not be implemented as long as our market is being ravaged by those who evade our trade commitments and import rules."

In expanding on the trade issues that are plaguing the industry, VanDriessche said, "It is clear that our current sugar policy is being undermined by severe breaches in our trade agreements. Mexico wishes to ignore its NAFTA commitments, and international trade houses employ what amounts to smuggling, or laundering schemes, to circumvent our import tariffs and undermine our domestic policy ... Until these trade problems are resolved, no sugar program can work effectively."

He went on to say, "Our producers' trust in trade agreements has been betrayed by these problems that have also undermined confidence in and the integrity of future agreements."

As for the current state of the domestic sugar industry, VanDriessche said, "During the past year and a half, our industry suffered immensely when prices collapsed as a result of an oversupply of sugar in the market. The reasons for this include: our large import obligations under the WTO; import quota circumvention by so-called stuffed molasses and cane syrups (concoctions with no commercial value that are formulated from world dump-price sugar, shipped into the U.S. where the sugar is extracted and sold on the domestic market, undermining quota restrictions); an increase in sugar-containing products; the uncertainty of imports from Mexico as disputes continue over NAFTA; excellent crop yields; and the need to increase our efficiencies in response to rising costs."

He said that revenues to producers under the current farm bill have been reduced by $2.2 billion since 1996, with no savings passed through to consumers. "This has led to the permanent closure of 17 beet and cane mills, and is forcing many producers to either buy their processing factories or exit the business. We were just informed last week that another beet factory will not process a crop this year. The largest refined sugar marketer in the U.S. today is in bankruptcy.

"Today, the U.S. sugar industry is in the worst economic condition in decades, and without prompt action by our government on several fronts, this nation's sugar industry will be devastated," VanDriessche said.

VanDriessche was accompanied at the hearing by Jack Nelson, President of Rio Grande Valley Sugar Growers, a sugarcane growing and processing company in Santa Rosa, Texas; Jim Horvath, President of American Crystal Sugar Company, a beet processing cooperative in Moorhead, Minnesota; Jack Lay, President of Refined Sugars, Inc., a sugarcane refinery in Yonkers, New York; and Jack Roney, staff economist for the American Sugar Alliance.