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.