An attempt by candy makers and their allies in Congress to rein in one of the more arcane commodity support programs is threatening to sink the House farm bill.
Rep. Virginia Foxx is expected to offer an amendment on the House floor on Thursday that would change U.S. sugar policy to make the program more market oriented.
For decades, sugar policy has been dictated by a complex system of price supports, production limits and import restrictions designed to maintain high commodity prices. Despite a number of attempts over the years to overhaul the policy, lawmakers have left it in place to protect sugar growers and processors.
But House Agriculture Chairman Mike Conaway, who is still trying to gain enough GOP support for the farm bill ahead of a final vote on Friday, plans to whip against his own bill should Foxx’s sugar amendment be passed.
The Texas Republican has characterized the proposal as a “poison pill,” because enough lawmakers — particularly those from sugar-producing states in the Great Plains and the South — would withdraw their support for the farm bill if it is passed. Conaway declined to comment on the number of members, however.
“We’re going to beat it,” Conaway told reporters on Wednesday, adding that he expects Democrats who support U.S. sugar policy to help with the effort. “If they have the respect for production agriculture that they’ve said over and over, I expect them to help us defeat all of these poison pills.”
House Agriculture ranking member Collin Peterson (D-Minn.) told POLITICO that he plans to help defeat the sugar amendment, even though he will vote against the overall farm bill. Minnesota is a top producer of sugar beets.
For her part, Foxx says the policy is an example of “crony capitalism” and “special-interest bailouts” that harm consumers and food and beverage manufacturers. Now, the North Carolina Republican told POLITICO that she thinks she has the votes to pass the proposal.
“It almost passed the last time,” Foxx said Wednesday. The House nearly approved a more far-reaching amendment during the last farm bill debate five years ago, falling short by just eight votes.
“And I think people are more aware of it and we have a more conservative conference,” Foxx said, adding that she still will vote in favor of the farm bill even if her amendment fails again.
In the last week, Foxx has rolled back certain parts of her proposal compared with a bipartisan version introduced last year, known as the Sugar Policy Modernization Act in hopes of attracting additional support from lawmakers.
Foxx decided to drop one of the most controversial part of her proposal: the elimination of the Agriculture Department’s non-recourse marketing loans for sugar processors, which guarantee a price for the crop and accept forfeitures as repayment.
Her amendment would still reduce loan rates and get rid of production limits, as well as give the Agriculture secretary greater flexibility in granting imports of sugar. It would also end a program allowing the government to sell surplus sweetener to biofuel producers.
Despite the changes, the American Sugar Alliance — which represents growers, processors and refiners like the cooperative American Crystal Sugar as well as Florida Crystals and Domino Sugar owned by the Fanjul family — argues Foxx’s amendment is still anti-farmer.
“Everything in the Foxx amendment is designed to depress sugar prices,” Phillip Hayes, spokesman for ASA, told POLITICO. “There is nothing designed to help farmers.”
ASA argues Foxx’s proposal is not “modest reform” but rather an attempt to unravel the program entirely so food and beverage giants can enjoy higher profit margins from cheaper sugar at the expense of U.S. growers.
While the U.S. sugar program keeps prices above world averages, the commodity is one of the most distorted on the market because of foreign subsidies.
The program, unlike other commodity supports, typically doesn’t cost taxpayers money because prices are kept above loan rates to ensure they are paid back. The exception was in 2013, when the USDA had to take on surplus sugar at a loss of $259 million. The Congressional Budget Office recently estimated that the sugar program’s costs would total $76 million over a decade.
ASA maintains that the 2013 costs were a result of Mexico violating a trade agreement by dumping sugar on the U.S. market, which sent prices plunging. The Trump administration and Mexico last year reached a new agreement aimed at avoiding another trade dispute over sugar imports.
Those who want to keep the status quo in the sugar policy are up against a broad coalition of interests angling to overhaul the program. Free market think tanks, taxpayer watchdog groups, environmentalists and the sugar-using sector like soda and candy companies and bakers have a well-organized campaign of newspaper editorials, ads and a lobbying blitz on Capitol Hill.
“This is a Soviet relic developed in the 1930s that imposes artificial price supports and production caps has not worked elsewhere, but has somehow stuck around,” Nan Swift, director of federal affairs at National Taxpayers Union, said during a press call on Wednesday. “This is not a reflection of our modern economy. We no longer need failed economic experiments to artificially support one small portion of the ag economy.”
Opponents argue that sugar policy is a raises prices for companies and consumers, as well as costs jobs, citing U.S. Census Bureau Statistics that the sugar program killed about 123,000 jobs between 1997 and 2015.
Even if the reformers get a win in the House, they face another battle in the Senate, where Sen. Jeanne Shaheen (D-N.H.) is expected to lead the effort. Her legislation has 19 cosponsors from both sides of the aisle.
Liz Crampton and Helena Bottemiller Evich contributed to this report.