Sugar Producer

June/July 2010 Sugar Producer

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FROM THE ASA by Larry Combest | (R)–TEXAS Learning From the Past Sugar Must Defend No-Cost Policy to Protect Industry’s Future The world looks much different today than it did when Sugar Producer magazine printed its first issue 35 years ago. The first personal computer was unveiled in 1975, and an eager upstart named Bill Gates founded a small company he called Microsoft. Now we all carry cell phones with far more computing power than the ’75 clunker that was about the size of a kitchen cabinet. And Bill Gates isn’t exactly a small-business man any- more. The war coverage that dominated television sets 35 years ago had little to do with “terror,” but the images were far more terrifying…even if they weren’t in HD. On the sugar front, the country’s first farmer-owned sugarbeet cooperatives were just in their infancies and looking to survive in an industry known for low profit margins. Well, maybe not all that much has changed after all. Today, 100 percent of beet companies are grower-owned, but in most years they still struggle with low- profit margins. In 1975, sugar prices were considered to be fairly high, but so was the cost of doing business. Those “high prices” would eventually plummet—as prices inevitably do—and then rose sharply years later. This rollercoaster for producers and consumers was one of the reasons Con- gress passed a sugar policy designed to maintain a steady market that would en- sure a high-quality supply of domestically grown sugar for a reasonable price. That policy has worked incredibly well ever since and today enjoys more biparti- san support in Congress than ever before. Although profit margins have continued to tighten for beet companies, producers have become better businessmen. Their efficiency, coupled with a strong safety net and the recent rebound in price, has positioned sugar as an economic leader in 30 Sugar Producer June/July 2010 rural communities across the country. Will it continue? Much of that depends on the farm safety net and the outcome of the ongoing farm policy debate. Sugar must remain vigilant in protect- ing its no-cost policy in the 2012 Farm Bill. And sugarbeet growers should keep an eye on another essential component of the farm safety net: crop insurance. Crop insurance has recently found itself in the crosshairs. The program was cut by $6.4 billion in the last Farm Bill and now, the USDA is seeking to extract more in the name of budget offsets. Considering that federal expenses for crop insurance have already fallen more than 35 percent since their peak in 2008, these crippling cuts are unnecessary. And considering the cuts would greatly undermine a program that has become an essential piece of the farm safety net and a mainstay for the rural economy, they are unwise. Sugar producers, joined by the Ameri- can Farm Bureau Federation and leaders from the corn, soybean, wheat, barley, and dairy industries, have asked the USDA to back off its plan. These groups know that decimating a successful public-private partnership that agriculture depends on could literally set rural America back 35 years. n Editor’s note: Combest, a Republican from Texas, is the former chairman of the House Agriculture Committee and was the lead author of the 2002 Farm Bill.

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