US Sugarbeet Production Strains Support Program

IT is hard to believe the inch-high shoots in Bruce Ogaard's field could stir up such political trouble.

They are sugarbeets - biologically fragile and hard to grow. "It's like baby-sitting an ornery kid," Mr. Ogaard says. But politically, they are tough as nails.

For 12 years, United States sugar producers have protected their crop from the volatile world market. But their success is causing new strains within the powerful sugar lobby. Some critics say it is the beginning of the end for the sugar program.

"It has never been this ticklish," says Tom Hammer, president of the Sweetener Users Association, which represents industrial manufacturers of food and beverage products. "If there's continued good weather, the program is going to be under stress."

But sugar producers in the Red River Valley and elsewhere think they can stick together.

"We always refer to the sugar group as a family," says Luther Markwart of the American Sugarbeet Growers Association. "As one of the six kids, I'm always going to say its OK for me to pick on the other kids. But don't let anyone else from the outside pick on my siblings."

It is the sugar program itself that is causing the family squabble. Instead of being paid for by taxes, like most farm programs, the sugar program is funded directly by consumers. It does this by setting relatively high domestic sugar prices and then limiting competition by regulating sugar imports. When foreign competitors use these kinds of trade barriers, the US complains loudly. But the US has done this for years with sugar.

The problem is that farmers - particularly sugarbeet producers here - have expanded production so much they've put Agriculture Secretary Mike Espy in a bind.

Sugar prices are so low that Secretary Espy earlier this month reduced imports to their legal minimum - 1.25 million tons a year - and extended it so the program could meet the requirement by averaging the results of two years. But domestic prices barely budged on the news. Unless prices improve soon, many producers are threatening to forfeit their sugar to the government and accept the federal subsidy rather than sell on the market. Government subsidies

Forfeitures mean the sugar program would start costing taxpayers. And the agriculture secretary is supposed to try to keep that from happening. Many economists believe Espy will soon impose limits on how much sugar producers can sell.

Most producers favor that approach, but not the low-cost farmers and processors in the Red River Valley. "That seems really unfair to us," says Mark Dillon, senior manager with American Crystal Sugar Company in Moorhead, Minn. Marketing quotas would be based on a couple of drought years in the region.

Some economists suggest the squabble within the industry will intensify. Others say the program could lose public support. Consumers lose

"If we have marketing allotments in place, there's going to be a lot of screaming going on, not so much from producers but consumer advocates and politicians," says Richard Wistisen, an analyst with Commodity Information Inc., a sugar consulting firm.

There are other cracks in the sugar lobby. Corn-sweetener producers, strong supporters of the sugar program, favor a North American Free Trade Agreement. It would greatly expand their markets. But sugar producers worry the trade deal will give Mexican sugar growers unlimited access to the US market.

"There's a lot of bad feeling on the corn side and the sugar side over NAFTA," says Thomas Earley, of Abel, Daft & Earley, a food and agriculture consultant group.

Will corn-sweetener producers and sugarbeet farmers part ways with the rest of the sugar industry? Don't count on it just yet.

"A rift is probably too strong a term," says Edith Munro, spokeswoman for the Corn Refiners Association Inc. "The determining factor will be what we see out there in world sugar markets."

"I don't think this is any more serious than the problems we've had in the past," adds Mr. Dillon.

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