2018 Farm Bill: With the passage of both the House and Senate versions of the farm bill, the next challenge will be to reconcile the two bills into a single conference report that will be voted on by both Houses and sent to the President for his signature. Sugar policy was unchanged in both bills, so the focus will be on other controversial provisions, such as the work requirements in the Supplemental Nutrition Assistance Program (SNAP). On July 18th, the House voted to proceed with the conference. We will continue to monitor the conference negotiations closely until they are completed. Hopefully the bill can be in place by the end of September when the old Farm Bill expires. Only time will tell.
Bioengineering Disclosure Regulations:
The National Bioengineered Food Disclosure Standard (NBFDS) was enacted on July 29, 2016. The statute requires the USDA to create a rule implementing a disclosure standard for bioengineered food. On May 4, 2018, USDA asked for comments on the proposed rule and on July 3, 2018, the U.S. Beet Sugar Industry filed 34 pages of comments in response to that request. A special thank you to Rebecca Larson from Western Sugar for her valuable contributions to some of the most technical aspects of our arguments. In our comments, we urged USDA to create a disclosure standard that follows the law, supports bioengineering and avoids misleading or confusing consumers. Specifically, we asked USDA to exclude refined ingredients, such as beet sugar, from the definition of bioengineered food because they do not contain modified DNA, a requirement for what is considered bioengineered food under the law. We stated, “Creating any presumption, even unintentionally, that beet sugar produced from transgenic sugarbeets is different or less desirable than its conventional counterparts or cane sugar is not supported by science.”
Even though the threshold (or percentage) of bioengineered ingredients in a food product that would trigger disclosure should not apply to beet sugar because it does not contain modified DNA, we also asked USDA to implement a high threshold (5% cumulative intentional use) for bioengineered ingredients in food because a higher disclosure threshold would minimize the regulatory burden from the farm to the grocery store. Our comments are posted on the American Sugarbeet Growers Association website.
Balancing the Market in FY 2019:
As we finish the marketing of the 2017 crop (ending September 31), USDA predicts ending stocks at 16.0%, which is well above the 13.5% target where year-end inventories should be under the suspension agreement with Mexico. Missing the target is typically a result of under-estimating production, over-estimating consumption, or a combination of both. The USDA and beet and cane industries are working hard to get better and more-timely information to increase the accuracy of the estimates. Mexican sugar exports to the U.S. for next year are based initially on estimates made on supply and demand in early July of this year. What is different this year is that Mexico only gets an assurance of half of its projected imports based on July estimates. That amount will be adjusted in September, December, and March as the U.S. beet and cane crops are processed.
Our industry has repeatedly made it clear that early estimates have to be conservative. As the year progresses and the crop is processed and in the warehouse, more foreign sugar can be added to the market if it is needed. If the market is oversupplied early in the year with foreign sugar, it can have a devastating effect that last for more than a year. The bottom line is that we should have a better market balance going forward as a result of the new suspension agreements that were negotiated in June of 2017.
The trade retaliation and counter-retaliation is very concerning for your export commodities. While short term price depressions can often be navigated, the longer-term effects can be devastating. To quote British economist John Maynard Keynes (1883-1946), “Markets can remain irrational longer than you or I can remain solvent.” The Trump Administration is trying to pressure our trading partners to correct many unfair trade practices that have been ingrained for decades. While righting wrongs should be applauded, the resolutions have to come quickly to spare producers and to prove that the pain suffered while achieving a solution was well worth it. Fortunately, as a major sugar importer, our commodity is not directly impacted by the ongoing multilateral trade disputes. Our domestic farm policy and trade policy are key to our industry’s stability through these difficult times in agriculture. We are hopeful that the renegotiation of the NAFTA can be completed before the new President of Mexico takes office on December 1, 2018.
Luther Markwart, author of Dateline Washington, is executive vice president of the American Sugarbeet Growers Association.