Attacks on U.S. sugar policy were threatened during consideration of the FY 2016 agricultural appropriations bills in the House and Senate. In the House Ag Approps Subcommittee, Cong. Charles Dent (R-Pennsylvania/Hershey) stated that he would not introduce a sugar reform amendment at that time, but he sent a clear message that he was likely to do so if and when the bill came to the floor. Any amendment in the subcommittee or committee would have lost, and that would not help him with a floor effort. With the appropriations process now in disarray, it is unlikely that any further appropriations bills will be voted on separately, but we always have to be ready for a vote.
The Senate Appropriations Committee was told by Senators Shaheen (D-New Hampshire) and Kirk (R-Illinois) that they had an amendment that would prohibit funds to make nonrecourse CCC loans available loans to any sugar company/cooperative that had gross revenues from sugar of $300 million or more in the previous fiscal year — which would make most sugar companies ineligible and force them out of the sugar program. Again, the amendment was withdrawn because a losing vote in committee would work against them on the floor. As in the House, a stand-alone agriculture appropriations bill is unlikely.
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While the antidumping and countervailing duty investigations are ongoing and final determination expected in early November, the Department of Commerce (DOC) is currently executing the suspension agreements reached between the U.S. and Mexican governments on December 19, 2014. Under that agreement, the DOC uses the World Agriculture Supply and Demand Estimates (WASDE) to make its first estimate of U.S. import needs in July for FY 2016, which begins October 1, 2015, and ends September 30, 2016.
On July 15, the DOC announced that U.S. residual needs above domestic production and required imports from all other trade agreements left a shortfall of 1,548,350 short tons raw value (STRV). Production estimates will change over time as the crop continues to grow, as weather events occur (hurricanes, frost, flood, drought, etc.) and as beet storage and processing conditions play out. Mexico is therefore guaranteed only 70% of the shortfall this early in the year (1,083,845 STRV)— an amount that cannot be reduced going forward. Buyers in the U.S. and sellers in Mexico can begin to make commercial decisions based on this volume. This number can increase October 1 if September estimates the need for more imports, but still not more than 70% of residual needs.
No more than 30% of the needs projected in July can be shipped to the U.S.
between Oct. 1 and Dec. 31, and no more than 55% can be imported before March 31.
On January 1, the percentage of needs increases to 80% of residual needs based on December estimates. Finally, on April 1, 2016, the final export amount for Mexico will be determined from the March WASDE estimates. As you can see, there are small adjustments to add sugar to the market over time once our domestic production is no longer projected, and when the sugar has been processed and is sitting in our warehouses.
What is also important in the suspension agreement is that no more than 30% of the needs projected in July can be shipped to the U.S. between October 1 and December 31, and no more than 55% can be imported before March 31. This is a critical time for both beet and cane processing, and this provision allows our industry to move product to market and not be forced to store it while large amounts of Mexican sugar enter our market.
Trans-Pacific Partnership (TPP) Negotiations
With the passage of Trade Promotion Authority in June, negotiations to conclude the 12-country trade agreement are now racing toward a conclusion. Negotiators and trade ministers met in Maui, Hawaii, at the end of July and hope to conclude the negotiations or have them at a point where they could be completed at a subsequent ministers meeting shortly thereafter. If the agreement is to be approved by Congress in 2015, it needs to be concluded very soon to provide the required time for congressional re-view. We are monitoring the negotiations very closely and continue to be reassured by the Trade Representative that no agreement will be made that undermines our domestic sugar policy.
Transatlantic Trade and Investment Partnership (TTIP) Negotiations (U.S. & EU)
The 10th round of negotiations was held in Brussels July 13-17. It is the negotiators’ intent to complete the negotiations and get agreement approval by the end of 2016 before President Obama leaves office. We are also monitoring these negotiations closely, but there are several months of negotiations left.
GMO Labeling Bill H.R. 1599
Pompeo (R-Kansas) Butterfield (D-North Carolina) The House was scheduled to vote on July 23 on the passage of the GMO labeling bill that would address critically important labeling issues. The key elements are:
1) Creates a uniform national system for labeling of genetically engineered foods. It would pre-empt state labeling laws either passed in the state legislature or by ballot initiative to require labeling. Note: the pre-emption does not apply to local governments wishing to restrict production of GE crops.
2) Requires developers of genetically engineered plants to consult with the Food and Drug Administration (FDA) on all new plant varieties used for genetically engineered food before they are introduced into commerce. (This has been done voluntarily on all GE crops in commerce.)
3) Upholds FDA’s authority to specify special labeling if it believes it is necessary to protect health and safety.
4) Creates a new legal framework governing the use of label claims regarding either the absence of, or use of, GE food or food ingredients.
5) Allows those who wish to label their products as GMO-free to do so through a USDA-accredited certification process.
6) Requires FDA to establish standards for the use of the term “natural” on food labels.
Many thanks to Megan Stevens (Southern Minnesota) for being our intern this summer. She did a tremendous job on various research projects that will benefit all domestic sugar producers, and specifically beet growers. Megan enjoyed a wide variety of experiences that will be helpful as she pursues a career in agriculture, and she was a real asset in our work on biotech issues.
We encourage your talented sons and daughters to apply for the 2016 internship next year. It truly is a tremendous opportunity, and applications are available on our website.
2016 Annual Meeting
Luther Markwart, author of Dateline Washington, is executive vice president of the American Sugarbeet Growers Association.