The House of Representatives yesterday passed an amendment to the 1997 agricultural spending bill that would cap the price of raw cane sugar. At the current price and rate of production, the cap would cost Hawaii's sugar industry $13.5 million a year. That loss, industry analysts say, could force some growers out of business.
Earlier this year, those growers and their Congressional supporters beat back a proposal to eliminate the federal sugar price support program.
The price cap issue has divided the state's dwindling sugar industry.
The state's biggest grower, Alexander & Baldwin Inc., disagrees with its fellow island sugar producers by favoring the price cap and supporting increased sugar imports.
A&B's support for a price cap comes because it is also the owner of California & Hawaiian Sugar Co., a sugar-cane refiner in Crockett, Calif. A&B says it is vital to keep the price of raw cane sugar low enough to make it attractive to cane-sugar refiners that have to compete with low-cost beet sugar.
Both Amfac/JMB Inc., which grows sugar on Maui and Kauai, and Gay & Robinson Inc., a Kauai grower, disagree with A&B, contending that the price cap would put them out of business on Kauai.
Price-cap opponents hope to keep the Senate from adopting a similar amendment in its version of the farm bill and then prevail when the two chambers come up with a compromise bill this summer.
The price-cap proposal passed the House yesterday in an amendment to the agricultural spending bill, which was adopted by a 351-74 vote. Both Rep. Neil Abercrombie (D, Honolulu) and Rep. Patsy Mink (D, rural Oahu-neighbor islands) voted against it.
"It's frightening that it (the sugar cap) is in there, but this is just the first phase of this," said Joseph Terrell of the American Sugar Alliance. "We'll be doing our best to educate the Senate and hopefully, get it out of the final bill."
Only four months ago, sugar farmers breathed a sigh of relief after winning a year-long struggle to keep price supports, controlled through import quotas, in the farm bill.
Opponents had denounced the sugar support system as corporate welfare that hurts consumers. But the sugar industry defended the system as necessary to help them compete with heavily subsidized foreign growers.
This latest threat is not as drastic but is nevertheless seen as a blow by isle growers other than A&B.
"I have been informed by the cane growers on the island of Kauai that if this bill becomes law and the cap remains on the price of cane sugar, that they will be driven out of business," said Mink in a floor speech condemning the cap. "That is thousands of jobs in my area."
Mink called the proposal a "back-door way of making sure that our domestic industry goes down" and lamented the reappearance of legislation harmful to sugar growers.
But A&B, which has 35,000 acres of sugar on Maui and about 7,000 acres on Kauai, said no company has a greater stake in the health of sugar than it does and that a price cap is a way to keep it healthy. A&B has made enormous investments in sugar, both as a grower and a refiner, the company said in a statement from its headquarters in Honolulu.
"However, we don't believe the salvation of Hawaii's sugar growing industry lies in ever-higher prices for raw sugar," A&B said. "Hawaii is competing with low cost, locally produced surplus beet sugar in our only logical market, the western U.S. If Hawaii's sugar is priced too high, why should consumers buy it?"
Hawaii's growers cannot exist without a healthy refiner and all domestic refiners, including C&H, have lost money because recent prices of raw sugar have been too close to the price they get for the refinded product, A&B said.
"If raw sugar prices can't be controlled, the outlook for C&H and other domestic refiners is pretty grim," A&B said, "and that would spell the end of Hawaii's sugar growing industry as well."
But other sugar farmers insist that they, not the refiners, need protection.
"The cap will hurt a lot of farmers," said Terrell. "It's unprecedented. They're singling out a commodity to put price controls on, which is contrary to the free-market tenor they say they stand for."
Gay & Robinson's general manager, Alan Kennett, said his company's 7,000-acre plantation on Kauai would not survive if the price cap makes it through congressional conference committee this summer.
"Quite honestly, it's going to be at the expense of the growers because, quite frankly, we cannot live with that price cap," Kennett said.
Hawaii's sugar industry is declining. The Hawaii Agriculture Research Center (formerly the Hawaiian Sugar Planters' Association) says raw sugar production, which for decades was above 1 million tons annually, will be about 460,000 tons this year and is expected to drop to about 390,000 tons next year.