The USDA is mulling aFrom staff and wire reports
plan to boost prices by
cutting the supply
Hawaii sugar growers joined their counterparts from across the country to plead in Congress today for action that would raise prices enough to keep them from going out of business.
Federal agriculture officials, meanwhile, said they are considering a program that would pay farmers not to produce sugar. Department of Agriculture representatives told a hearing of the Senate Agriculture Committee that the most feasible way to prop up domestic sugar prices at the least cost to taxpayers would be to give growers some of the surplus sugar the government is holding.
The growers would not take possession of the sugar but would instead receive a "payment in kind" certificate, exchangeable for cash.
Critics derided the idea as a desperate attempt to bail out growers, who they say are partly to blame for the surplus.
Because of a steep drop in prices, growers have been threatening to forfeit to the government up to $500 million worth of sugar that is pledged as collateral on federal marketing loans.
USDA recently bought 132,000 tons of sugar at a cost of $54 million to avoid forfeitures this summer, but another 1.4 million tons are still under loan.
Growers said the current sugar program of import quotas and loans is not helping them.
E. Alan Kennett, president and general manager of Gay & Robinson, a family-owned sugar business on Kauai, told the Congressional committee that production in Hawaii is down by two-thirds since the early 1980s and he noted that sugar is no longer grown on Oahu or the Big Island.
"Unfortunately, since the demise of sugar on the Big Island, nothing has replaced sugar as a viable agricultural crop and the former cane lands remain idle, overgrown with weeds," Kennett said. "Unemployment is high and drug usage, marijuana growing and drug trafficking have increased dramatically."
Ray VanDriessche, president of the American Sugarbeet Growers Association, told the committee: "This is not a crisis of a particular group of growers, or growers in a particular region.
"Without exception, this economic crisis is hitting every grower through the industry because every grower's income is directly tied to the price of refined sugar."
At today's hearing, Senate Agriculture Committee Chairman Richard Lugar said the idea of paying growers not to grow sugar was "ill-conceived" and he called for greater sugar policy reform.
The Clinton administration's latest budget estimates show "the current (sugar) program will cost taxpayers over $1 billion and result in the accumulation of over 5 billion pounds of sugar in government inventory between now and 2005," the Indiana Republican said.
"We can no longer permit this program to continue on this indefensible path," Lugar said.
Gus Schumacher, undersecretary for farm and foreign agricultural services, said low sugar prices make it likely that processors will forfeit substantial amounts of sugar to the government over the next several months.
As a result, the department is seriously considering a program that would use stocks the government acquires to pay farmers to plow under some of their sugar fields, Schumacher said.