Dateline: Washington

It’s payback time. July, August and September are the months during which the majority of sugar loans from the USDA’s Commodity Credit Corporation come due. Beet and cane processors begin redeeming the bulk of their loans, along with interest on those loans.

The loans must be paid back by September 30 to avoid any cost to the government in fiscal year 2009. If prices were low, companies could forfeit the sugar to the government and remove it from the market.

Both the Bush and Obama Administrations have managed the program properly thus far over the course of the 2009 fiscal year.

While our industrial customers clamored for the exiting Bush Administration to import a massive amount of sugar last fall, the new farm bill restrained such action. In the past, making import decisions based on erroneous speculation of production and consumption caused the government to import more than what the market needed — which depressed prices for producers and caused forfeitures to the government. This was a big problem for industry and government.

The new farm bill simply says that unless there is a clear emergency, they must wait until April 1 before adding more sugar to the market from our 41 foreign suppliers. This helps avoid surprises that occur in the now fully integrated U.S. -Mexican North American sugar market. Who would have guessed last August that Mexico would send us 1,300,000 tons of sugar this year? Without the farm bill constraints on the Bush Administration, we would have likely seen more imports, and instead of repaying sugar loans this year, we would likely have seen forfeitures. The new farm bill removes a huge amount of speculation in determining additional imports with factual justification.

The Administration now estimates that we will have about one million tons of sugar to carry over into the next fiscal year (2010), which begins October 1. While those stocks are less than the burdensome surpluses we have experienced in past years, the market is adequately supplied. While beet sugar inventories are being drawn down, the cane sector has adequate supplies of raw sugar and excess refining capacity to meet market needs.

It is also important to note that during the October-March period, 83% of U.S. sugar production occurs, but only 49% of consumption. Add to this the minimum imports from our 41 foreign suppliers under our WTO obligations, CAFTA and unlimited imports from Mexico, and it is clear there is plenty of sugar to meet consumer needs. As Imperial Sugar’s Savannah refinery gradually comes back on line in the months ahead, there’ll be even more capacity.

By the spring or early summer of next year, USDA decision makers will have a clear understanding of the needs of the market and plenty of time to import additional amounts if they are required. This message has been articulated to Secretary Vilsack on numerous occasions.

The bottom line is that the current farm bill is already making an important difference to sugarbeet and sugarcane growers.

Climate Change — The Senate must now grapple with its version of a climate change bill as they have witnessed the political fallout from the highly sensitive and controversial House-passed bill. Once again, House Agriculture Committee Chairman Collin Peterson should be applauded for standing strong in the face of intense pressure from House leadership and playing pivotal role in improving the bill for agriculture.

Clearly, from the sugarbeet producer’s perspective, we would likely see increased input costs on the farm with little, if any, opportunity to create marketable carbon credits.

Our biggest concern is the impact of the legislation on our processing facilities. Our industry is working closely with legislators to find a way to address this issue.

The bigger policy concern is that other developing countries, such as India and China, will either not commit to — or likely enforce — any efforts to reduce carbon emissions that would hamper economic growth. This would be a key factor in the U.S. manufacturing sector for moving more jobs from the United States to the developing world. This is not a welcome outcome if we are to get our own economy back on track.

Save the Date — ASGA’s 2010 annual meeting will be January 31 to February 2 in Charleston, S.C. Please make plans to join us for an informative look at the key issues facing our industry in the years ahead. Watch our website for more details.