2018 is going to be a good year for sugarbeet growers. With the amended Mexican antidumping and countervailing duty suspension agreements going into effect last October, the beet crop going into the ground this spring will fully benefit from the price recovery provided by the amended agreements. Yes, there is and always will be work to defend and maintain the suspension agreements and make sure that Mexico complies with the provisions, but it is in the interest of both governments and industries that these agreements work as they were intended. These agreements will manage sugar imports from Mexico so there is no need for any discussions with Mexico regarding sugar in the NAFTA negotiations. What everyone must also realize is that USDA needs the best production and consumption data available to determine how much additional sugar is needed from Mexico or other quota-holding countries. Working with USDA to get that critical information is very important so they do not make decisions that oversupply the U.S. sugar market with imports. This is a very high priority for our industry.
Tax Reform: Much of the focus this fall has been on the tax reform bill as it makes dramatic reforms to lower corporate taxes and remove a number of personal deductions. Section 199, or the Domestic Production Activities Deduction (DPAD), was eliminated in both the House and Senate tax bills. The DPAD is calculated as 9% of qualified production activities income of the taxpayer (in our case, the cooperative), capped at 50% of cumulative W-2 wages of cooperative employees. Cooperatives can retain it at the cooperative and use it for capital improvements or pass the deduction through to their members. Section 199 is especially valuable to the grower-owners of cooperatives because their share of the cooperative’s DPAD is based off their share of the total beet payment (or patronage) paid to growers, not corporate profits. It is likely that without this deduction, grower taxes could go up--not down. Senator Hoeven (R-ND) led the charge to amend the Senate tax bill to retain Section 199 and had the support of 194 organizations, and eight senators cosponsored the amendment. But the amendment faced a budget point of order which would have required a 60-vote margin instead of a simple majority to gain Senate approval, so the amendment was not offered.
There is a flurry of activities in Washington this summer that will impact the beet sugar industry in the months and years ahead. Here are a few of them.
2018 Farm Bill: Hearings have begun in both the House and Senate Agriculture Committees on the new Farm Bill. The House Subcommittee on General Farm Commodities and Risk Management held a hearing on April 4th that included views by the domestic sugar industry. Jack Roney, Director of Economics and Policy Analysis for the American Sugar Alliance presented testimony entitled “U.S. Sugar Policy: Why We Have It and How It’s Working”. The message to Congress had six key points.
Much of the focus in the testimony was on the continued subsidization and dumping of Mexican sugar into the U.S. market. The one year that sugar policy cost taxpayers money, was when Mexico subsidized and dumped sugar into our market in violation of our trade laws. The biggest threat to a successful sugar policy is our trade problems with Mexico. Our producers are suffering great economic stress as a result of the suspension agreements with Mexico. The Hawaiian sugar industry closed its doors last December, as victims of the Mexican dumping. The Trump Administration is attempting to address this problem in the month of April with expectations to have it resolved no later than May 1. Your industry leaders are very engaged in this very difficult negotiation. If it cannot be resolved to our satisfaction, then duties should be put in place to stop all the sugar imports from Mexico. That is not our desire but we need a solution that works.
Hearings in the Senate began in Agriculture Committee Chairman Pat Robert’s state of Kansas. The next hearing that will include sugar will be held in Michigan in early May at the Saginaw Valley Research and Extension Center. Ranking Member Stabenow and the committee will provide the opportunity for commodity leaders to show the importance of their commodities to the state, the need for a strong safety net for farmers and the importance of research for American agriculture.
Sugar will likely testify in various regions around the country during the course of this year. We will tell our story at any and every appropriate venue. We may see more “listening sessions” outside of DC rather than formal committee hearings. These sessions can be held in more places at much lower costs than a formal hearing.
Florida Congressman Ted Yoho reintroduced his resolution called “Zero-for-Zero” in which U.S. sugar producers would give up our domestic policy if other countries would stop subsidizing and dumping their surplus sugar in the global market. The U.S. sugar industry wholeheartedly supports this resolution. When half of the sugar produced in the world is produced at a higher cost than in the U.S. and the less efficient foreign producers were forced to exit the business, we would see world sugar prices reflect the cost of production and rise substantially. Unilateral elimination or crippling of sugar policy would be foolish to push domestic producers out of business and become dependent on foreign suppliers for a strategic commodity in your food supply.
The long delay in getting a Secretary of Agriculture confirmed, along with several other political appointees in the subcabinet positions has caused harmful delays in moving the agriculture agenda forward in the new Administration. A strong Secretary has been needed to promote agriculture and defend its budgets and resources as the Administration sorts out the specifics of their priorities. Of particular note, we continue to wait on how we move forward with regulations on biotechnology disclosure under the new law passed last July.
Planting intentions for 2017 were released on March 31. Beet plantings will be down two percent or 28,600 acres from 2016. With market surpluses and greater confidence in higher yielding varieties, fewer acres are needed to produce adequate supplies for processing. There are no increases in any state in the country.
Crop Insurance: There has been some confusion this spring over the new 2017 definition of “practical to replant.” However, it does not apply to sugarbeets. The change was made to the FCIC “basic provisions” covering all crops, but the sugarbeet policy has its own “special provisions” that contain a separate definition of “practical to replant” that remains untouched. The following is an explanation of the issue by our crop insurance legal counsel Ken Ackerman.
It would be unthinkable to send an NFL coach to a Super Bowl with only a handful of players and let him draft players after the game starts. To some extent, that is what happens in the world of politics whenever a new President takes the oath of office. On January 20th at noon, when the reins of power are handed over to the new President, he is now the head coach in a global and political Super Bowl, and it will be some time before his entire team is selected, vetted, confirmed and fully in place. Whoever the President picks for his team is a good indication of how his Administration views the world and what their priorities will be.
It has been eight years since Washington, DC welcomed a new president, and each inauguration brings a flurry of activity and a grand sense of interest in how the new leader will address a multitude of challenges the nation faces going forward. With President-Elect Trump having no public office experience, there is no history that would allow people to project how he will govern. There is only campaign trail rhetoric to give a sense of what his leadership will look like. Many have withheld judgement while waiting to see who he surrounds himself with in his cabinet and high ranking advisors. There are surprises in some of the positions, but a common thread among all of them is that they are smart, successful and have tough leadership skills. They will focus on reducing and streamlining the government while building private sector businesses and jobs. You will see a very unconventional governing process in the months to come.
2016 Elections: The election of Donald Trump went against the conventional wisdom of pundits and the general public, and sent political shockwaves across the country and around the world. In the early morning of November 9, America experienced perhaps the greatest electoral upset in its history and tried to peer through the dense fog of uncertainty. The democratic process is not pretty or easy – it wasn’t meant to be. Many voters in both parties wished that they had been given the choice of different presidential candidates, but the long primary schedule provided ample time and opportunity to sort through that process. For those who have lingering anxiety and are seeking comfort, google the lyrics of the singer-songwriter Steven Stills-- “And if you can’t be with the one you love, honey, love the one you’re with.” The fact is that we have a new President-elect, and we must get behind him.
Congress finally passed the GMO disclosure legislation after one of the most difficult agricultural negotiations ever conducted between Senate Republicans, led by Agri-culture Committee Chairman Pat Roberts (KS), and Democrats, led by Ranking Member Debbie Stabenow (MI).
On July 7, the Senate passed the compromise bill by a vote of 63 to 30. Chairman Roberts noted it was the most important piece of legislation in 20 years to come out of the Agriculture Committee. On July 14, the House passed the Senate bill without amending it by a vote of 306 to 117. The President will sign the bill in July. Your American Sugarbeet Growers Association played a key leader-ship role in the development and passage of the bill.
What does the bill do and how does it impact the U.S. beet sugar industry?
Read our entire issue and back issues. Click here.
The 2016 congressional agenda will be driven by the development and consideration of the 12 appropriations bills that determine how — and how much — money will be spent for all government pro-grams and services in FY 2017, which starts on October 1. While the goal is always to complete all spend-ing bills in the committees and con-sider them separately on the House and Senate floors, it is rarely accomplished. We typically see a short-term continuing resolution (or CR), which means, “Don’t make any changes, just keep doing what you have been doing” because there is no agreement to do anything different, and they run out of time. Or, we see an omnibus bill that wraps all or most of the 12 bills together and is voted on before Congress departs for Christmas.
There is a concerted effort to con-sider and pass all 12 bills to show the public that the Republican-con-trolled Congress can, in fact, get its work done in a critically important election year. There is always skepticism in Washington that this will be accomplished, but we must operate as though it will. Markups in the Agriculture Appropriations Sub-committee and the full Appropriations Committee always provide an opportunity for policy opponents to put proposals forward to cut USDA funding for employees who implement certain parts of the 2014 farm bill sugar provisions. Subcommittee and full committee staff and members must be briefed and provided with materials for any debate, and then all House and Senate members and staff need to hear from the industry if a vote on the floor of either body appears likely.
Read our entire issue and back issues. Click here.
Luther Markwart, author of Dateline Washington, is executive vice president of the American Sugarbeet Growers Association.