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Corn processors take aim at sugar

Annie Baxter Jul 7, 2015
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The corn syrup and sugar industries have long been rivals in the sweetener market. The trade groups representing them are currently in a pitched legal battle concerning competing claims about the “naturalness” of their products, among other issues. 

Now the Corn Refiners Association is picking a fight at the policy level. It has hired lobbyists to take aim at government supports for the sugar industry.

“The relations are quite poor between the two industries, and we’re not going to bite our lip about the policy difference,” says John Bode, president of the Corn Refiners Association. Its members include big companies like Archer Daniels Midland and Cargill.

At issue is a part of the Farm Bill known as the sugar program. It provides price floors and limits on sugar imports. And it offers government-backed loans, which sugar processors can repay with sugar if they default. That happened in 2013 when the price of sugar dropped.

Bode says taxpayers had to swallow a couple hundred million in losses. He wants the program to end and is hoping to attack it through the Congressional appropriations process.

“It’s simply an embarrassment,” he says. “When taxpayers hear about these big loans being defaulted upon, they think it happens throughout food and agriculture and it’s simply not the case.”

But defaults are rare, says Phillip Hayes, a spokesman for the American Sugar Alliance, which represents sugar cane and sugar beet producers and processors. He says Mexico dumped sugar into the U.S. market in 2013, causing prices to plunge and domestic processors to struggle.

“That was the one time in the past 10 years that we’ve seen any cost to U.S. sugar policy,” he says.

Hayes did not want to comment directly on the corn refiners group’s latest moves. But he laments the notion that any agriculture-related group would take aim at the Farm Bill, which provides crop insurance premium subsidies to many big crop producers.

“All they would be doing is aiding agriculture’s main opponents to gut the safety net that all farmers depend on,” he says. “And that’s not just sugar farmers. It’s corn farmers. It’s soybean farmers. It’s all kinds of farmers.”

But many experts say that sugar gets a disproportionate share of support, due, perhaps to its hefty political lobbying and clout. Ag economist Daniel Sumner at the University of California, Davis would cheer the end of the sugar program — and all other agricultural subsidies.

“Something that the corn industry and the sugar industry have agreed on is that there’s something special about farming and agriculture that means for one reason or another normal market forces don’t work, and therefore those industries need subsidies,” he says. “None of these farm subsidy programs seem to make a lot of sense.”

In that regard, Sumner finds both of these big players in the sweetener industry to be full of baloney.

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