Spirited debates over fiscal cliffs, sequestration, continuing resolutions, debt ceiling increases, etc., focused on where more money could be raised for the federal government and where and how to cut spending.         Sprinkle in a spirited debate over gun control and a race by both parties to fix a broken immigration and guest worker system to attract the ever-increasing and influential Latino vote in state and national elections. 
    It has not been an easy three months, but tough decisions are never easy. 
    Everyone agrees that across-the-board spending cuts (sequestration) are the worst way to reduce federal spending; but allowing it to occur sets in motion congressional efforts to find a better way of reducing spending.  All of the committees in Congress will have an obligation to find ways to cut expenditures for future programs.  The agriculture committees have already shown us that they can accomplish this in a thoughtful way.

    Farm Bill — It now appears that the leadership of both houses of Congress wishes to complete a farm bill this year.  The House and Senate ag committees will be drafting legislation under two very different budget resolutions.  Non-binding, resolutions are a guide as to how much should be cut from programs and policies, but the cuts do not have to all come in the farm bill package.  It appears that the Senate is content with the $23 billion reduction over 10 years in agriculture policy that passed the Senate last year, but we are likely to see modifications to proposals on southern crops (rice and peanuts) that would garner more support for the farm bill from southern senators.     The House bill will need more savings — somewhere near the $31 billion over 10 years.  The real battle will be over food stamp — or the SNAP (Supplemental Nutritional Assistance Program) — spending in the bill. 
    As of the first of April, it now looks like the committees will be drafting the farm bill in May.  The committees typically do not like to let their passed bills linger on hold before taking them to the floor to avoid the opponents of the bill the opportunity to rail against it.  How and when the bills receive floor consideration remains unclear.
    As for sugar policy, we see strong support in both agriculture committees, as we did last year. The real fights will be on the floor when each body takes up the debate.  It will be critical for the commodity groups and farm organizations to work together and support one another in a unified effort to get the bill passed.  When sugar policy opponents in the Senate contemplated attacks in both the continuing resolution and the budget resolution earlier this year, the American Farm Bureau Federation and the National Farmers Union, along with other commodity groups, stood firm with sugar to oppose harmful amendments.  We deeply appreciate their support to defend our policy.
    In February and March, your grower leaders walked the halls of the House and Senate office buildings to educate members and staff of the need for the continuation of the current sugar provisions and to ask them to oppose any proposed amendment.  With almost half of the U.S. House having never voted on a farm bill, there is a huge educational process that must be done by congressional leaders and industry representatives. Each and every day, we are explaining the need for our policy to sustain our domestic industry for the benefit of food security for American consumers, rural jobs and putting $20 billion into the U.S. economy at no cost to taxpayers.

    The Market — Unfortunately, we are in the worst market we have seen in many years.  Bumper beet and cane crops in the U.S. and Mexico and excess imports from our other trading partners have clearly resulted in oversupply. 
    In order to avoid sugar forfeitures on August 1, USDA is working feverishly to find creative ways to get the market back in balance as quickly and efficiently as possible.  The 2008 farm bill was designed to avoid massive costly forfeitures by removing sugar from the market and disposing of it so it does not overhang the market and cause a multi-year problem.         Given the market sensitivity of both timing and volumes of sugar that could be removed from the market this year, USDA is keeping its options very close to the vest.  Staffs who are working on the oversupply problem are seasoned professionals, and we are anxiously awaiting an announcement of an action plan to address our problem.  The solution is not simple, because we are dealing with a North American market that has three separate industries, different domestic sugar policies and no trade restrictions.

    2013 Acreage — While U.S. beet acreage is projected to be down by 19,000 this year, a later spring will have a much bigger impact than reduced acreage on final sugar production from the 2013 crop.    

    In 1985, the average raw cane sugar price was 20.34 cents per pound (same as it is today); the Midwest wholesale price of refined beet sugar was 23 cents a pound (28-30 cents today); and the retail price was 35 cents a pound (68 cents today).
    On Valentine’s Day this year, the Coalition for Sugar Reform and their congressional champions unveiled their “Sugar Reform Act” for the 2013 farm bill.  The essence of the bill is to take beet and cane growers back to loan levels that were established in 1985.  Buying inputs to run your business at prices that existed 28 years ago would certainly boost your short-term bottom line — but it would drive your suppliers out of business.  Since 1985, we have closed half of our beet and cane factories and mills because sugar prices were stagnated around the loan rate and input cost kept increasing.  Third-party investors abandoned the industry and sold the companies to growers — who in turn have embraced every possible efficiency they could find and afford just to stay in business.
    The sugar reform bills — HR 693 in the House and S. 345 in the Senate — would make numerous changes to current sugar policy, with the sole intent to assure that the sugar market is oversupplied all of the time.  It adds more risk to import decisions that would oversupply the market, requires producers to hold even larger surplus inventories, puts foreign suppliers ahead of American farmers, and effectively eliminates any surplus sugar to be used for ethanol production as a way to balance the market.
    Except for the loan rate, the secretary of agriculture could change any provisions of the policy, taking into account the interests of consumers, workers in the food industry, user businesses and the relative competitiveness of domestically-produced and imported foods containing sugar (dumped by subsidized foreign producers). 
    This proposal neither respects nor appreciates the work, risk and investment made by our farmers to deliver a superior product to their door whenever they want it.  It provides little certainty in order to plan and invest in the future
    Our opponents will peddle their reform proposal on Capitol Hill and to the media as a “modest change” that doesn’t repeal price supports, or marketing allotments, or import quotas.  It is the job of our industry leaders and congressional champions to tell the truth about the need of our current policy for the food security for our nation.  Your grower leaders will be delivering that message far and wide on Capitol Hill in February and March before the planting season begins.  Support them and show your appreciation to them in every way you can as they go about your telling your story to our nation’s policy makers.
   
    The farm bill schedule for 2013 has not and will not be firmed up until we get past the numerous battles over spending cuts during the next several weeks or even longer.  At this point, lawmakers have resigned themselves to the view that across-the-board spending cuts (sequestration) will occur.  Everyone agrees that this is the worst way to cut spending; but given the polarized political entrenchment, we end up with a form of impromptu government leadership: “just make it up as you go along, from one crisis to another.”  All of agriculture has to play a strong defense during this period to avoid the pillaging of its policies to pay for the cost of other government programs.      

    While the fiscal cliff debate addressed the personal tax bracket issues, it did nothing to curb spending. The spending cut debate began on January 2 and will run until late March.  It will likely be more contentious than the tax debate. 
    In late February and first of March, the debt ceiling will need to be raised, and the automatic spending cuts for domestic programs and defense will occur unless cuts are made in a more thoughtful and calculated fashion. 
    Finally, on March 27, the government will shut down unless further funding is approved to finish the rest of the fiscal year ending September 30, 2013.  Each of these events will be used as a political opportunity to cut spending.  It will be a fierce battle that will play out in the daily headlines.
    Voters in the last election said they wanted government to fix our fiscal problems — and that required leadership by both parties in both Houses in Congress and the White House.  As we watch the debate over these critical weeks by all of these players, let’s remember the basic elements that define leadership and see how well they adhere to its basic principles.
    Definition of Leadership:
    1) Establish a clear vision.
    2) Share that vision with others so that they will follow willingly.
    3) Provide the information, knowledge and methods to realize that vision.
    4) Coordinate and balance the conflicting interests of all members and stakeholders.
    5) A leader steps up in times of crisis and is able to think and act creatively in difficult situations.

    Until there is clarity of where spending cuts will be made, all congressional committees are in a holding pattern for moving legislation forward because they do not know how much they can spend.  So the agriculture committees in both chambers have to let that process play out before they make final adjustments to the farm bill that was designed last year. 
    Once the funding level is clarified, the Senate will likely go first, because it passed a bill last year and there is more confidence that with some changes to their bill, they can move it for full Senate approval and use it to pressure the House to act.
    The bigger challenges lie in the House, which refused to bring the farm bill to the floor last year once its own ag committee completed its work.  In early January, Ranking Member Collin Peterson made it very clear to House leadership that they would have to guarantee floor consideration before the Democrats on the committee would work on a bill. Again, since nothing of significance will happen before the end of March, we will witness these kinds of political battles.
   
    As for sugar policy, our customers were screaming about stronger prices during the past couple of years — but the market is now down about 50% from where it was a year ago. Markets go up and markets go down.   As we struggle with an oversupplied market, it makes it clear to policy makers that we need an adequate safety net and a policy that protects jobs, responds to unfair foreign trade practices, and is critically important to our food security and our rural economies.  Oh, by the way . . . our customers are doing just fine and enjoying much lower prices.
    The sugar market has been out of balance for a number of months now. Both the U.S. and Mexico had bumper crops in 2012, and additional imports were added to the market last April based on bad import data from Mexico. 
    I can assure you that addressing the core problems that caused of this oversupply is a high priority for your industry leaders.  Immediately after 420,000 tons of foreign sugar were added to the U.S. market last April, industry leaders from the U.S. and Mexico met with top U.S. government officials to discuss how to provide more accurate and timely data from Mexico to better manage our policy with greater accuracy and certainty.
    With low U.S. raw sugar prices near world price levels, there is less of an incentive for sugar suppliers from long distances to ship to our market.  There are multiple avenues of getting our market back in balance, but it will take time.     

— Farm Bill —
    There were great hopes that the 2012 farm bill would be made part of the final deal to help reduce our nation’s annual deficits and staggering debt.  The Administration, Senate and House Democrats wanted a farm bill as part of the final package, but House Republican leadership stalled those efforts at least until Christmas.  When Congress left for its brief Christmas holiday, all indications were there would be some form of brief extension of the 2008 farm bill, with plans to complete it in early 2013.  However, we are still in a period and a process where even the best predictions are, quite frankly, unpredictable.
    As for sugar policy, we are now in a very different market scenario than when the House Agriculture Committee and the full Senate considered our policy.  Given the oversupply of sugar in the world market, large beet and cane crops in both the U.S. and Mexico, and an additional 420,000 tons of imports allowed into the U.S. market (based on incorrect data at the time of the decision), we have seen both the raw and refined sugar markets collapse from previous-year levels.  Will sugar users pass on savings of lower prices to consumers?  They have not passed on savings in the past, and we do not expect that to occur in the future.  It will make their arguments much more difficult to defend in another public debate.
    Assuming the farm bill slips into next year and faces votes again in the Senate and House, there are many new members in both bodies that will need educating.  We have 87 new members in the House and 15 in the Senate.  With all of these new faces, we must work hard to educate them about the sugar industry and U.S. sugar policy. 
    We want to thank everyone who has participated in their political action committees, because it provides industry representatives the opportunity to speak directly to the members of Congress so they can better understand our issues and the strategic importance of our industry.

— Biotech —
    On November 15, the last appeal on a Roundup Ready® issue was ruled on, ending a long legal battle over biotechnology in sugarbeets.  We spent almost five years (1,755 days) in the courts during which we were engaged in four cases in two U.S. district courts (San Francisco and Washington, D.C.) and three appellate cases in the Ninth Circuit Court of Appeals (San Francisco).
    It is our sincere hope the opponents of biotechnology will now cease their attacks on our efforts to raise our crop in a more efficient and environmentally friendly way.  We have proven that the technology is safe, the sugar is the same as that from conventional production, and that our producers are great stewards in removing bolters and managing against weed resistance — because grower stewardship is essential to retain the value of the technology.
    Biotech opponents, however, are renewing their efforts to pass state ballot initiatives to require labeling of foods that contain ingredients from biotech crops.  While they lost such an effort in California last year, they are targeting Washington, Vermont and Connecticut.  We stand shoulder-to-shoulder with other biotech crop producers to oppose such labeling efforts.  Our American Sugarbeet Growers Association has established a new Biotechnology and Research Committee to monitor and engage in these types of efforts for the years to come, and we are prepared to face the challenges and opportunities before us.

— Crop Insurance —
    Price election for 2013 will be $58.95, which is appropriate given the state of the current marketplace. One important change this year is that replant reimbursement will not be 1.5 times price election, but rather a fixed dollar amount of $80 per acre. We successfully sought this modification to avoid an annual battle to retain a more reasonable replant amount.  When sugar prices drop, replant costs do not, so this is a great improvement over our traditional coverage.

     What is also interesting is the number of counties that were carried by Obama and Romney.  There are 3,033 counties in the U.S.  The President won in fewer than 750 (24.7%) and Romney won more than 2,283 counties (75.3%).  The bottom line is that land does not vote — people do.  Democrats prevailed in the urban areas in key states.
    While his win is a result of a brilliant campaign strategy, the President knows that he must lead a politically divided nation. 
    There are various benefits to an incumbent being re-elected. Months are saved from one administration transitioning to another, and it allows them to focus on the pressing issues faced by our nation.  While new cabinet members will be replaced and new priorities set, it comes with much less disruption than a change in presidents.
     For the record, the USDA (sugar program administration, biotechnology, crop insurance, etc.) and the Trade Representative’s office have worked extremely well with our industry over the last four years, and we look forward to working with them over the next four years.
    Senate:  The Democrats and two Independents picked up Indiana and Massachusetts, making it 55D-45R.  We expect Chairwoman Stabenow from Michigan and Ranking Member Roberts from Kansas to continue to lead the Senate Agriculture Committee. We are waiting to see who will fill the committee positions vacated by Senators Conrad (ND), Nelson (NE) and Lugar (IN).
    House:  As of this writing, there are at least 85 new members of the House, with six races still being recounted or contested.  It was always clear that Republicans would continue to control the House by relatively the same margin.  The House Agriculture Committee has lost at least six members who are leaving Congress, and we will see if any other members leave to take other committee assignments.  If the farm bill slips into next year, we will have approximately 200 members who have never voted on a farm bill.  There is a great deal of work to do in 2013.

Lame Duck Agenda —
    Congress reconvened during the week of November 12 to reorganize and lay out the agenda for the remainder of 2012.  The issues surrounding the “fiscal cliff” (automatic tax increases and spending cuts) and what our leaders do — or fail to do —will have the focus of the nation and the world. 
    For months, we have been looking at various scenarios for passing a five-year farm bill.  There are multiple ways to accomplish it, but until House leadership decides to move forward on the “fiscal cliff” issue, no probability can be assigned to getting it done this year, and it would then be extended and dealt with next year.

Huge Sugarbeet Crop —
    Despite the drought, we are looking at a great crop this year.  As we wrap up, harvest estimates are that we will see a 34-million ton beet crop. This, along with a good cane crop and larger production, enters a North American market that is oversupplied, and we will be carrying the highest level of stocks since 1999/ 2000.  World sugar production is up, stocks are building, and prices are falling dramatically. 
    With the North American market awash in sugar under the current policy, the arguments by sugar users against our policy have collapsed.  As we know, it’s easy to add sugar to a tight market, but it takes a long time to bring an oversupplied market back into balance.

2013 ASGA Annual Meeting —
    Grower leaders from across the country will gather to get the latest information on what the election means for the future of U.S. agriculture and sugar policy.  The legislative agenda, politics and priorities in the 113th Congress; the operation of sugar policy under the 2008 farm bill and the provisions of the 2012 farm bill; biotechnology; an update on the U.S.-Mexico sugar market, and other topics will take center stage at the annual meeting in San Diego on February 3-5.  It is a meeting that no grower or industry supplier should miss.  You can see the program, register for the meeting and make hotel reservations online at www.americansugarbeet.org. If you need other information, call the ASGA office at (202) 833-2398.     

    An unprecedented three amendments against U.S. sugar policy were raised by opponents.  The first amendment considered on the farm bill was to completely eliminate U.S. sugar policy.  The amendment was offered by Sen. Jeanne Shaheen (D-New Hampshire) and co-sponsored by Senators Ron Kirk (R-Illinois) and Frank Lautenberg (D-New Jersey).  It failed on a vote of 46-50. 
    The second amendment, which sought to eliminate all the changes and improvements to the sugar policy made in the 2008 farm bill, was offered by Pat Toomey (R-Pennsylvania) and co-sponsored by Senators Richard Lugar (R-Indiana), Dan Coats (R-Indiana), Richard Durbin (D-Illinois), Ron Kirk (R-Illinois) and Jeanne Shaheen (D-New Hampshire).  This amendment would have rolled the sugar loan rate back 27 years (1985), eliminated the feedstock flexibility program (surplus sugar to ethanol), eliminated the April 1 date that restricts adding sugar to the market until the U.S. crop is mostly processed and the harvest in Mexico is well along, and giving U.S. growers first right to 85% of the U.S. market.  The amendment also mandated an ending stocks-to-use number (15.5%) that would have kept our market in an oversupplied situation, creating depressed prices and threats of forfeitures.  It also would have allowed countries that could not fill their tariff rate quota amount to sell their excess to the U.S. market to another foreign supplier.  This amendment lost 46-53.        
    The third amendment, offered by Saxby Chambliss (R-Georgia), rolled the April 1 date back to February 1, in which the USDA could announce greater imports to the market. By moving the day back earlier in the year, it adds more risk to making accurate import decisions. The amendment passed by a voice vote in the Senate.
    The Senate farm bill must now wait for the House to take action on its own bill, which is completely separate from the Senate bill.
    House — On July 11, the House Agriculture Committee completed its crafting of the farm bill in a 15-hour marathon session during which 103 amendments were considered.  An amendment by Rep. Bob Goodlatte (R-Virginia) was the same as the amendment outlined above by Sen. Toomey, making drastic changes to the sugar policy.  The amendment failed 36-10.
    A second amendment regarding an attempt to effectively modify the U.S.-Colombia Free Trade Agreement was ruled out of order and withdrawn because it was outside the jurisdiction of the ag committee.  So the sugar provisions in the House bill are the same as those in the current bill.
    Many Thanks to your grower leaders who were in Washington for our summer board meeting and the many visits they made on Capitol Hill asking members to vote against any amendments against the sugar policy.  Their visits truly make a difference.
    The big question now is when and how the House will proceed with consideration of the farm bill.  With the Senate’s completion of the bill and the current bill expiring September 30, there is great pressure for the House to take up the bill before Congress recesses starting August 4 and continuing to September 10.   As of this mid-July writing, there is no answer to that question.
    Whenever the House completes action, the House and Senate farm bills will have to be reconciled so that one bill is created from the two separate bills.  The leadership of the two committees will manage that process to produce a “conference report.”  The conference report cannot be amended in either body and is sent back to both the House and Senate for a very brief debate and final vote.  If approved by both chambers, the bill is then sent to the President for his signature and to become law.
    In a separate action, Rep. Charlie Dent (R-Pennsylvania) offered an amendment in the House Appropriations Committee to the FY 2013 agricultural appropriations bill.  It was a “means test” restricting sugar processors from taking out CCC loans.  The amendment failed in committee by a vote of 15-30.

Biotech
    The 800-plus-page Final Environmental Impact Statement (FEIS) was published on June 8, and the public review and commenting ended July 9. 
    On July 20, USDA published the Record of Decision (ROD) in the Federal Register, which once again deregulated Roundup Ready® Sugarbeets (RRSB).  While growers no longer have to abide by the USDA compliance agreements under the partial deregulation, they must retain their records and comply with the provisions of the technical use agreement with the tech provider.  Specific instructions will be communicated to growers by their processor. 
    Beet growers have always been good stewards of the technology and will continue to be in the years ahead.
    Litigation — The two RRSB cases currently pending in U.S. District Court will now have to be reviewed by the court in the context of the deregulation of RRSB.

Supply & Demand
    Carryover stocks ending September 30 are expected to be at 15.4% of usage, which is the highest level of stocks in many years.  With a large beet crop expected this year, there will be plenty of sugar available for customers without increasing imports above our minimum obligations under our various free trade agreements.

Annual Meeting
    The 2013 ASGA Annual Meeting will be held on February 3-5 in San Diego, Calif., at the Hilton San Diego Bayfront Hotel.  The program will include various speakers and events pertaining to key industry issues and current sugar policy.
    Meeting registration will be available online at www.americansugarbeet.org beginning as of November 1.  Visit the ASGA website for more information.

ASGA Intern
    Many thanks to Leah Kramer from Bird Island, Minn., for a great experience this year.  Leah met many members of Congress and worked on several projects that were helpful for our grower leaders’ work on the farm bill.  We appreciate her dedicated efforts and support over the past two months.            

    USDA has a window from April 1 (the earliest date, barring an emergency) until approximately July 15 to announce additional imports for the market, with the likelihood that they will be delivered before the end of the fiscal year ending September 30.  This does not prohibit USDA from making late import announcements and extending the entry period into the following fiscal year.
    April estimates are that stocks will drop to a level of 6.8%, due to imports from Mexico dropping by 385,000 tons from the previous month’s estimates.  Speculating  how much sugar will come from Mexico is a very difficult process, and numbers can fluctuate significantly from month to month. 
    Prior to the April estimates, industrial sugar users asked the secretary to import volumes in the 700,000- to 900,000-ton range, which would clearly oversupply the market and collapse prices.  Most of the domestic industry has advised the Secretary to be cautious in any consideration of additional imports.  We have an earlier- than-usual spring this year.  If we avoid late-spring frosts and have a good growing season, we could see earlier harvests and production for the 2012 crop that would be sold in the current fiscal year ending September 30.
    This administration has done an admirable job in managing additional imports while constantly facing the uncertainty of unrestricted imports from Mexico and operating the policy at no cost to taxpayers.

Biotech
    The United States District Court for the District of Columbia has scheduled oral arguments on June 15, 2012, on the summary judgment motions in the Grant litigation.  The summary judgment motions that will be heard by the court include motions by the sugarbeet industry and USDA that ask the court to conclude that the partial deregulation of Roundup Ready® Sugarbeets was proper, and a motion by the Center for Food Safety asking the court to find that even partial deregulation with conditions required a full Environmental Impact Statement.  It is unclear how soon after the argument the court will rule on the parties’ motions.  We are also waiting to see a final Environmental Impact Statement, which we believe will be ready this summer.

Crop Insurance
    For years we have tried to address the problematic  lack of adequate compensation for costs to replant our crop.  The system that is currently in place has two key factors for determining coverage:  price election (which changes each year based on the presumed value of the crop before it is planted) and a multiplier of the price election.  When market prices are stronger, this formula is helpful to cover replant costs. But when market prices drop, so does the replant coverage when using the current system.
    Grower leaders have asked for — and we have now achieved — a fixed number for replant coverage.  Having a fixed number decouples it from market price swings, so when market prices drop and your costs don’t, you have a better risk management tool. 
    In April, RMA published a fixed number for replants for the 2013 crop at $80 per acre in California (closing date is April 30); and we expect that this will be applicable to all other growing areas.  This number can be changed as future costs continue to increase.  The coverage only applies to seed and fuel, which is why it does not fully reflect your actual cost of replanting the crop.

2012 Farm Bill
    A clear path for completing a farm bill in 2012 remains shrouded in a cloud of uncertainty.  The Senate Agriculture Committee is committed to reporting out a bill in April for consideration on the Senate floor as early as May.  There is no assurance as to when it will come up for debate, but the Senate will need to act promptly in order to force the House to move on a farm bill.  Typically, the House forces members to take tough votes on bills, only to have the bills die in the Senate — which creates political risk for House members.  So, in an election year, the House will wait for the Senate to act before taking a bill to the House floor.
    There also are two fundamental problems that have to be dealt with.         
    First, the Senate is writing a farm bill with cuts of $23 billion over 10 years from the commodity-related provisions.  Under the House budget (which is not law because the Senate will not agree to it), the House version is supposed to cut about $33 billion out of the commodity provisions of the farm bill.  So the two bodies would have to somehow reconcile a $10 billion difference between their bills, which is no simple task. 
    Second, time is slipping away. When the House returns on May 7, there will be only  51 legislative days before the election, which is not a lot of time to pass a bill as major as the farm bill.  Four anti-sugar policy bills (two in the House and two in the Senate) remain active, but with relatively few co-sponsors — most of whom are the usual fervent opponents.  The industry is well-prepared to oppose such proposals when they are brought to the floor as amendments to the farm bill.                

    There currently are two bills in the House and two in the Senate that would essentially do away with our sugar policy.  This legislation is being driven by industrial users who want the market to be habitually oversupplied to drive down their cost and your income. 
    The message to legislators will be very simple and clear.  What our customers want is a reliable supply of high-quality sugar that meets their unique specifications, stored at our cost in the producer’s warehouse facilities, delivered when and where they want it — and at the lowest possible price. In order to meet those needs, they need a geographically dispersed industry, multiple supply sources and multiple competitors who battle in the marketplace over the opportunity to take care of the user’s needs. 
    But the industrial sugar users want the low prices they had before this farm bill.  All they have to do is look back at history to see that from 1985 through today, low prices have caused the closure of 53 beet and cane factories, mills and refineries. Only 48 beet and cane processing facilities remain.  Along with consolidation, the industry has transitioned to be the last owners of the factories. Because of high risk and low returns, it has driven third-party factory owners out of our business, forcing growers to buy the companies — not out of want, but out of necessity.  Further industry consolidation is not in the industrial or end-consumer’s interest. It is a threat to the food security of our nation.
    Sugar users will argue that the current policy is an outdated system of command and control government, and they will raise all of the old tired arguments we have heard for years.  The fact of the matter is that we have the best story to tell in agriculture:
    • We have run a no-cost sugar policy for the past 11 years, and it is scheduled to be no-cost for the next 10 years. 
    • 142,000 jobs are related to our industry.
    • We pump almost $20 billion into the economy.
    • Our policy is a proper response to the unfair foreign trade practices of dumping surplus sugar on the world market at prices below anyone’s cost of production.
    • The beet sugar industry is one of the lowest-cost sugar producers in the world; yet we can’t survive against unfair foreign trade practices.  If all federal policies were as fiscally responsible and effective as U.S. sugar policy, we would have huge budget surpluses instead of staggering deficits and debt.
    • Our policy works, and it should be left alone.

    The path of the 2012 farm bill is still very uncertain.  With major structural changes coming in the policies of other crops, uncertainty of the funding for those policies, alignment with the agriculture community, politics/elections and the lack of time to consider a farm bill this year, a one-year extension of current policy is certainly in the mix.
    The next critical policy decision by the Obama Administration is whether additional imports will be allowed after April 1.  Individual companies will be providing their input to USDA so it can make accurate decisions.
    It should also be noted that if we have an early spring, we could see larger crops in 2012, given the lack of snowfall in many areas. If that occurs, more sugar from the crop going into the ground this year would be processed in late August and September, which would add supplies to the current marketing year.

    ASGA Annual Meeting — We had a fantastic annual meeting this year in Orlando, with great speakers on a number of topics key to our industry’s future.  Next year we will be meeting in beautiful San Diego from February 3-5 to once again learn about issues impacting our future.
    New ASGA Leadership — Many thanks to former President Russ Mauch (Minn-Dak) for two great years (the maximum term) of excellent leadership.  He served the nation’s beet growers well and was an outstanding representative for your interests.
    The gavel has now been passed to Kelly Erickson (Red River Valley/ American Crystal); Vice President John Snyder (Washakie Beet Growers/Wyoming Sugar); and Treasurer Don Steinbeisser Jr. (Montana-Dakota Beet Growers/Sidney Sugars).  These gentlemen are seasoned and proven industry leaders who are prepared to take on the challenges that lie ahead.    

    First, there is an extraordinary amount of time being spent on campaigning this year because of redistricting. Every 10 years, when the House congressional districts are redrawn, lots of issues are created for incumbent House members.  Some states lose districts, some add districts, or existing districts are reconfigured to correct for population shifts, so members must engage their new constituents.  Sometimes two incumbents are pitted against each other in a new district.  The bottom line is that there is lots of turmoil for members who have to adapt to new congressional districts and constituencies.
    Second, the primary process requires members to fend off challengers from within their own party, as well as position themselves for a variety of potential opponents from the other party.  This becomes a huge distraction and a drain of energy and attention for the members and staff.
    Third, in order to spend the required amount of time working on the campaign and raising funds for the campaign, the House has fewer legislative days.  The House schedule for 2012 has 109 days scheduled for votes.  There are 92 legislative days before the November election, and only 79 legislative days before the August recess. 
    Fourth, the pressure is on to avoid controversial votes. Every vote that members cast will be scrutinized by their opponent in an effort to use it against them.  Thus, there are fewer votes and a deep desire to avoid politically sensitive issues.
    Fifth, it’s a presidential election year.  Typically, when a presidential candidate is in a member’s state or district, the member wants to travel with the candidate  (but not always) to show how connected they are with the current or future president.  Presidential visits usually draw big crowds, which are hard for members of Congress to turn down.
    The bottom line is that there is a constant flurry of political activity all the way to election day.  Your industry representatives spend lots of time talking to new candidates who are running for office and incumbents fighting to stay in office.  We are constantly working to clarify which members or potential members are supportive of the U.S. sugar industry and policies that either sustain or threaten our industry.
    All of this begs the question, “Is there time to pass a farm bill in 2012?”  Any major piece of legislation requires a good deal time to develop and floor debate that takes precious time, which is difficult to schedule in a compressed legislative calendar. While we expect to see work done on the 2012 farm bill early this year to address both spending levels and structural changes in some farm policies, there is little certainty as to when (and whether) work can be completed and action taken by both Houses of Congress. Work on the bill in the spring will clarify whether it can be passed in the summer. Stay tuned and be ready.

U.S. Sugar Supply & Demand
 
    January estimates by USDA of sugar supply and demand reduced supplies by 578,000 tons, primarily due to speculation on the Mexican crop size and available sugar to export to the U.S.  Mexico suffered a drought last year that was followed by more-than-adequate rainfall.  That delayed harvest by about three weeks.
    We are reminding everyone that it is still early in the year; and since the Mexican crop was delayed, no realistic projections of domestic production can be credible until early March, when more than half of the Mexican crop will be harvested and processed.  Everyone must be patient and let the Mexican data become more certain.         After April 1, a much better assessment of Mexican sugar exports to the U.S. can be ascertained — and U.S. production will be well near its completion.  There is plenty of time to balance U.S. supply and demand in the post-March period.  This system has worked effectively in the past and will continue to do so in the future, if it is allowed to operate as it was designed.