New Farm Bill and the U.S. Sugar Industry

Today, congress voted on the new farm bill. The senate may vote on it as early as tomorrow. The legislative branch is overwhelmingly in favor of the farm bill as it stands. By contrast, the executive branch, led by our President, and of which the USDA is a part, is against it. The USDA website displays the arguments against the bill. The expectation is that the President will veto the bill. The further expectation is that both the house and the senate have the votes to override his veto. We shall see.

Where does the sugar industry, represented by both cane and beet interests, fall in all of this? Their position can be found in various websites, such as the American Sugar Alliance, but can be summed up by stating that the provisions in the farm bill related to sugar are supported by the sugar industry. One key element in the bill is what is referred to as "an ethanol provision." How this provision is supposed to work, was discussing in the New York Times back in October 2007. If too much foreign sugar is imported, it essentially obligates the government to buy surplus domestic sugar, and sell it at a discount to ethanol producers to blend with corn fermentables toward the production of ethanol. This, in turn, would prevent the undesired stockpiling of domestic sugar.