The first quarter of 2018 has been action packed for our industry. We had a very successful annual meeting in Washington, D.C. bringing in the top agricultural leaders from the House and Senate who will write the next farm bill and key leaders from the Trump Administration who have a direct impact on implementing the bill and overseeing the suspension agreements with Mexico. It is essential for them to see and speak to a ballroom full of beet farmer leaders and for our leaders to see and hear from those who shepherd the farm bill through the Congress.
As the farm bill draws near, we began to refresh congressional staff of our issues and concerns. A House Agriculture Committee room was filled with congressional staff to get an impactful briefing by ASA economist Jack Roney and American Crystal grower, Joel Gasper on the importance and defense of U.S. Sugar policy. In that briefing we had various boxes of chocolates for Valentine’s Day from multiple manufacturers, showing that the cost of the sugar in the candy was insignificant compared to the retail price.
For three weeks in late February and early March, beet and cane growers blanketed Capitol Hill making hundreds of office visits to connect with staff and educate them on the importance of our sugar policy. We express our deepest appreciation to those who made all of the appointments and took the time to walk the halls of Congress. At each office, growers presented a Hershey chocolate bar noting that the candy bar cost 39 cents in the early 1980’s and today it costs $1.39. There were two cents worth of sugar in the candy bar in the early 80’s and there is two cents in it today. Members and staff were shocked at how little the cost of the sugar was in the product. Our costs have gone up just as our customers costs have gone up and we are just trying to survive. We have closed processing facilities and they have built or expanded over 100 facilities under the current policy. Our opponents are doing everything they can to change sugar policy in various ways to oversupply the market, drive down the price and put us out of business so they can have access to subsidized dumped foreign sugar.
At the core of the conflict with our customers and their Members of Congress is their false belief that our growers are making lots of money off of sugar beets and cane and that you all would do just fine with less. While a penny a pound doesn’t sound like much to the average person, it means $100+ per acre for most of our growers and we cannot sustain growers with those kinds of reductions. Our opponents are either ignorant of your economic situation or are in denial, which leads to their deceptive arguments to Congress and to the media. To address this problem, 60 bankers and tax professionals in every beet and cane growing area who have confidential and intimate knowledge of thousands of grower’s financial condition have responded to the proposed changes to sugar policy in a letter to the Chairman and Ranking Members of both the House and Senate Agriculture Committees. Key excerpts from the letter is as follows:
“…Given the confidentiality of their individual financial records, no one is in a better position to see and comprehend their income and cost challenges than we… American farmers are experiencing substantial economic stress. Beet and cane sugar producers are no different… We have had the opportunity to review the “Sugar Policy Modernization Act” that sugar policy opponents proposed to Congress in November 2017. It is clear the food-manufacturer opponents of sugar policy do not know what we know. If this bill, or its individual elements, is adopted, it would force oversupply of the U.S. sugar market and would effectively remove the price safety net for American sugar farmers. The collapse of the domestic sugar producers would cause major disruptions in the supply chain for food manufacturers and American Consumers… The proposed legislation favors foreign sugar producers and multinational candy conglomerates over American jobs.”
The Senate is working to bring a comprehensive bipartisan Farm Bill through its committee and to the floor maybe in late April or May. Their calendar is full of other pressing legislation, so consideration of the Farm Bill will need to be brief. You can fully expect at least one amendment on sugar policy during the bills consideration.
The House was scheduled to move a bill through the full Agriculture Committee in late March, but because of changes the Republicans wanted to make in the SNAP (Supplemental Nutrition Assistance Program – “food stamps”), the Democrats demanded that their leader, Collin Peterson, not negotiate any further on that program. So we have a delay in House consideration of the Farm Bill. The House will have to assess its strategy as to how to proceed when they return the second week of April. Hopefully both Houses can get a Farm Bill passed in the second quarter of the year, well ahead of the fall elections.
The Omnibus spending bill passed in late March, contained all of the spending for the government until Sept. 30, 2018. Contained in that bill was a fix to the section 199A problem that arose out of the tax reform passage in 2017. All growers should have received information regarding this issue from their cooperative. We worked with various professionals to make sure that those growers structured under a C corp who want to take advantage of the deduction had a checklist of issues they would need to consider and address if they decided to restructure their corporations.
Among numerous other important activities, Secretary Perdue and the entire North Dakota Congressional delegation met at the greenhouses at NDSU in Fargo to see the research facility and then tour the beet factory (along with Collin Peterson) at Moorhead, Minnesota. It was critically important for the entire sugar industry for the Secretary to see a beet factory and learn more about our industry. We are thankful for industry leaders and Senator Hoeven for making that happen.
Luther Markwart, author of Dateline Washington, is executive vice president of the American Sugarbeet Growers Association.