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Johanns on Sugar

U.S. Secretary of Agriculture says allotment change makes sense.

Here's how Mike Johanns, U.S. secretary of agriculture, described sugar policy proposal when he unveiled the administration's plan for the 2007 Farm Bill:

"We are proposing to keep the sugar program with one policy proposal. Currently if we import more sugar than 1.532 [million] tons, we are obligated to lift the limits on the sugar program, the marketing allotments. Now literally what happens is that says to the producer, "Let it go, if you've got sugar, sell it if you choose to." We just basically open it up.

"Now the problem that creates for us is, we're also obligated by law to administer this program here at the USDA with no net cost to the taxpayer. As prices go down, once you hit that loan rate area people will forfeit sugar and you would literally have to set aside funds to buy sugar.

"We are proposing to keep that program with this policy change. We are saying that if we go over 1.532 [million] tons of sugar, that we could impose the marketing allotments.

"Now just to get a little more specific, with NAFTA, which was negotiated and passed now a decade ago, we have been ratcheting down - according to the NAFTA requirements -- the duties on sugar. Essentially it's an open market now. It is absolutely an open market during the life of this next Farm Bill.

"Mexico raises a lot of sugar, but they use a lot of sugar, and typically have a pretty strong price. We adjust to think that we're not going to get sugar every year but it does lead us to think that there may be years that we will get sugar, duty free, under the NAFTA agreement, that could push us over 1.532.

"The policy approach to that therefore is to ask Congress for the authority not to lift the marketing allotments which would collapse the program, but to put the marketing allotments in place.

"From a standpoint of the sugar industry, sugar producers, I would think, would look at this and say, "This makes sense."

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