Sugar Producers Press USDA: 2005 Allotment Has Industry Calling For Better Management

The U.S. Department of Agriculture is mismanaging the nation's sugar program, creating a climate of oversupply, low prices and forfeitures, industry officials claim.

The USDA is charged under the federal farm program with regulating the amount of beet and cane sugar produced in the United States every marketing year.

Supply restrictions were created to stabilize domestic sugar prices so the industry can operate at no direct cost to taxpayers.

Sugar imports are also restricted through government tariffs.

But industry officials say they believe the USDA's 2005 allotment of 8.1 million tons is too high and they fear an oversupply will harm producers and the market.

Larry Walker and Dan Colacicco, USDA economists who help manage the nation's sugar program, could not be reached for comment Monday or Tuesday. Messages left at their Washington offices were not returned.

"We've felt all along that the allocation is about 400,000 tons higher than it should be," said Steve Williams, a Fisher, Minn., farmer and president of the Red River Valley Sugarbeet Growers Association.

The allotment, announced July 16, has depressed sugar prices and has triggered loan forfeitures among some Michigan sugar producers, said Kevin Price, director of government affairs at Moorhead-based American Crystal Sugar.

Some Michigan producers who used sugar as collateral on government loans have forfeited sugar because market prices have fallen below loan rates, Williams said.

Refined sugar sold for about 21 cents per pound on Tuesday, near the sweetener's loan rate of about 22 cents per pound.

Red River Valley producers don't have any sugar under loan, but feel the pinch from low prices, industry officials said.

"We are very concerned about this hurting prices," said Susan Johnson, spokeswoman for the Wahpeton, N.D.-based Minn-Dak Farmers Cooperative.

American Crystal and Sen. Kent Conrad, D-N.D., have urged Agriculture Secretary Ann Veneman to put a portion of the 2005 allotment in reserve.

"Despite a clear mandate from Congress to operate the sugar loan program at no cost to taxpayers, the (Agriculture) Department seems increasingly willing to take deliberate steps to drive down sugar prices and encourage loan forfeitures," Conrad wrote in a letter to Veneman. "I am writing to urge you to take immediate corrective action to stem the forfeitures now occurring under the sugar loan program."

The Red River Valley's sugar beet industry has proposed setting the 2005 allotment at about 7.7 million tons of sugar, Price said.

"We've urged them to better manage the program," he said. "We think they should be more conservative in setting the allotments."

One program used during previous years to reduce sugar supplies paid farmers to destroy part of their crop.

"We're not advocating that at this point," Price said.

The Associated Press contributed to this story.

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