Sugar Policy and the 2008 Farm Bill (CRS Report for Congress)
Premium Purchase PDF for $24.95 (21 pages)
add to cart or
subscribe for unlimited access
Pro Premium subscribers have free access to our full library of CRS reports.
Subscribe today, or
request a demo to learn more.
| Release Date |
Revised Jan. 30, 2009 |
| Report Number |
RL34103 |
| Report Type |
Report |
| Authors |
Remy Jurenas, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
-
Premium Revised Sept. 12, 2008 (18 pages, $24.95)
add
-
Premium Revised May 15, 2008 (15 pages, $24.95)
add
-
Premium Revised Jan. 24, 2008 (26 pages, $24.95)
add
-
Premium Revised Aug. 13, 2007 (12 pages, $24.95)
add
-
Premium July 25, 2007 (11 pages, $24.95)
add
|
Summary:
Congress reauthorized the sugar price support program with some changes in the Food, Conservation, and Energy Act of 2008 (P.L. 110-246, the enacted 2008 farm bill). The sugar program is designed to guarantee the price received by sugar crop growers and processors and is intended to operate at "no cost" to the U.S. Treasury. To accomplish this, the U.S. Department of Agriculture (USDA) controls supply by limiting the amount of sugar that processors can sell domestically under "marketing allotments" and restricts imports. At the same time, USDA seeks to ensure that supplies of sugar are adequate to meet domestic demand. "No cost" is achieved if USDA applies these tools in a way that maintains market prices above minimum price support levels.
Since January 1, 2008, sugar imports from Mexico no longer face quotas or duties under the North American Free Trade Agreement. Other imports are allowed entry under quotas found in other free trade agreements (FTAs). To address the potential for a U.S. sugar surplus caused by additional imports under these trade agreements, the enacted farm bill mandates a sugar-for-ethanol program. USDA is now required to purchase as much U.S.-produced sugar as necessary to maintain market prices above support levels, to be sold to bioenergy producers for processing into ethanol. Funding is open-ended for this program. Other provisions increase the minimum guaranteed prices for raw sugar and refined beet sugar by 4% to 5%, mandate an 85% market share for the U.S. sugar production sector, and remove certain discretionary authority that USDA exercises to administer import quotas.
The enacted sugar provisions reflect the proposal presented to the House and Senate Agriculture Committees by producers of sugar beets and sugarcane and the processors of these crops. They favored continuing the structure of the current sugar price support program but sought changes to enhance their position in the U.S. marketplace. Their sugar-for-ethanol provisions ensure that the prospect of imports adding to U.S. sugar supplies under any future trade agreements will not undermine the program's price guarantee and the sugar industry's market share. Food and beverage manufacturers that use sugar opposed the proposed program's provisions, arguing that costs to consumers will increase and that new requirements will restrict the flow of sugar for food use in the domestic market. The Bush Administration opposed these provisions, with the President identifying them as one reason why he vetoed the farm bill.
USDA has continued to estimate a tight domestic sugar supply in FY2009 largely due to reduced beet production. Its import quota decisions made to date and its estimate of sugar expected to enter from Mexico and other FTA partners do not point to a sugar surplus. As a result, USDA announced in September 2008 that the sugar-for-ethanol program will not be implemented this year. Attention now turns to how USDA will implement newly enacted rules dealing with the timing of additional raw cane sugar versus refined sugar imports, because of the implications for market prices.
For background information on the sugar program and a review of more recent developments, please see CRS Report R40995, Sugar Policy Issues, by Remy Jurenas.
