Sugar loans under attack
By Pete Pichaske
on Capitol Hill
Star-BulletinWASHINGTON -- Hawaii's sugar growers are once again bracing for a Capitol Hill vote that could shape the industry's future. One year after Congress rejected attempts to eliminate the sugar subsidy program and instead passed only modest reforms, critics of the program are pushing an amendment sugar growers say could devastate their industry.
The amendment would do away with federal "nonrecourse loans" to sugar processors. Nonrecourse loans, unlike other loans, give the government no recourse to collect. If a processor defaults, he has to give up his collateral (the sugar) but need not repay the loan.
The House is due to vote on the proposal tonight or tomorrow.
Opponents of sugar subsidies call their proposal a minor, incremental change that merely ends an egregious example of corporate welfare.
"This is a sweetheart deal if I ever heard one," said Rep. Charles Schumer, D-N.Y., co-author of the amendment.
But supporters of sugar subsidies say the change would be profound.
Eliminating the possibility of the government having to take a processor's sugar if the price drops too low, they argue, eliminates the government's incentive to support sugar prices at levels acceptable to growers.
"Nonrecourse loans are the basic bulwark of the price support system," said Jack Roney, director of economics and policy analysis for the American Sugar Alliance, the sugar industry's chief lobbying group here. "This would be an enormous change."
Noting that it was only last year that Congress reauthorized the farm bill for another seven years, Roney said he was optimistic that the House would defeat the proposal. "The remaining cane producers are already on the ropes,' he said.
But Schumer and other reformers were equally confident. "We are ready for the rematch," he said.
Hawaii's congressional delegation has unanimously opposed drastic changes in the sugar subsidy program, arguing that changes could wipe out what is left of Hawaii's ailing industry. A spokeswoman for Rep. Patsy Mink, D-rural Oahu/Neighbor Islands, said the congresswoman is working to defeat the current proposal.
Hawaii's sugar industry, meanwhile, has been split on recent attempts to eliminate or reform the subsidy system. Most growers are against the idea. But Alexander & Baldwin Inc., which owns a California refinery that would benefit from lower sugar prices, has consistently favored an end to price supports.
