USDA Secretary Mike Johanns told Dow Jones Newswires that "the sugar program is part of the farm bill debate." The USDA sugar program uses a tariff rate to protect U.S. sugar producers. Johanns says the program needs to be fixed, and wants to see that change in the 2007 farm bill.
"You have to do something with this program," Johanns says. "How best to approach that is still a debatable issue, but I don't believe there is anybody here in Washington that would make the case that this program continue as it is without recognizing that you could have additional sugar coming in which could lead to forfeitures. Some way, some how, we will have to deal with that."
The 'additional sugar' Johanns refers to is Mexico's, as an agreement between the U.S. and Mexico will allow for significant Mexican sugar imports into the U.S. beginning October 2007. U.S. producers worry that they will have to forfeit their sugar to the USDA to keep afloat.
Senate Agriculture Committee member Norm Coleman, R-Minn., suggests that ethanol could provide a solution for U.S. sugar producers.
"I hope we look at a sugar-to-ethanol policy where it would be possible to rake some of the excess imports and put it into energy," he says.
Sugarcane is a more efficient source of ethanol feedstock than corn. Brazil, the world's largest producer of ethanol, makes its ethanol from sugarcane.