bakingbuyer - November 2011 - 28

BAKERY BIZ TIPS

sugarreform
A growing number of lawmakers – including Democrats and Republicans from the House and Senate – are working to enact a comprehensive reform of the U.S. sugar program that will allow buyers and sellers to conduct business in a competitive marketplace, without costly government intrusion. In the 2012 Farm Bill, reform of the current U.S. sugar program is needed to put an end to high sugar prices, according to groups pushing for reform. The current U.S. sugar program costs bakers and consumers more than $4 billion each year in higher sugar prices, according to the American Bakers Association. This sugar policy has a long history of supporting a small group of sugar producers at the expense of sugar users. ABA is firmly against current sugar policy and actively supports sugar program reform. U.S. sugar prices are at an alltime high, and continue to average nearly twice the world price. In 2010, world refined sugar prices averaged less than 28 cents per pound, but U.S. prices were over 53 cents a pound. Last year’s U.S. sugar price was more than twice its 2007 level. Unlike other farm programs, U.S. sugar policy is designed to impose its costs on U.S. consumers, making it, in essence, a hidden tax on food and beverages, according to the Coalition to End the Big Sugar Bailout. This coalition was created by small business owners and consumers who oppose government programs that artificially drive prices higher, namely the U.S. sugar program. “Our solution is simple – eliminate the current program and allow the free market to dictate prices,” the coalition states on its website, endsugarbailout.com. Sugar is derived from two different crops: sugarcane, which is grown in Florida, Louisiana, Texas and Hawaii; and sugar beets, which are grown in Minnesota, North Dakota, Idaho, Michigan, Nebraska, Colorado, Montana, Wyoming and California After harvest, sugarcane is milled into raw sugar and then refined. Sugar beets are processed directly into refined sugar. Cane and beet sugar are generally indistinguishable. The United States has never been self-sufficient in sugar production, and must import a portion of its needs each year. Most imports come from developing countries in South America, Central America, Asia, Africa, and the Caribbean, and are in the form of raw cane sugar—which must be refined for use in making foods and beverages or for sale directly to consumers.
JOHN UNREIN
28 · BAKING BUYER · NOVEMBER 11

THE SUGAR PROGRAM IS MADE UP OF FOUR PARTS:
1. Import quotas (also called Tariff Rate Quotas, or TRQs) set limits on how much sugar can be imported into the U.S. every year. Imports above this level are subject to an extremely high tariff, typically higher than U.S. sugar prices. 2. Price supports enforce a minimum price for sugar in the U.S. domestic market. This makes the domestic price substantially higher than the world market price. 3. Marketing allotments are aimed at preventing surplus supplies in the domestic market. Each beet processor and cane mill is under a government imposed and legally-binding limit on the amount of sugar it is permitted to sell each year. 4. A sugar to ethanol program forces the U.S. Department of Agriculture to purchase “excess” sugar and resell it to ethanol refineries for pennies on the dollar.

http://www.sugarbailout.com

bakingbuyer - November 2011

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