Bonnie: Farm bill could increase investment in sugar production
By Jerry Hagstrom, The Hagstrom Report
|QUINTA, Calif. — The next farm bill could be used to increase investment in sugar production, Agriculture Undersecretary for Farm Production and Conservation Robert Bonnie told the Sweetener Users Association here today.|
In the opening session of the SUA’s International Sweetener Colloquium, Perry Cerminara, the director of commodities sourcing for the Hershey Company who is chairman of the group, said that demand for sweeteners outpaces supply, resulting in high prices and “investments need to be made in the sugar industry.”
Bonnie noted that Cerminara “mentioned” the need for increased investments and added, “We have a farm bill this year, there are opportunities to work on that.”
Asked in an interview what investments he believes the farm bill could deliver, Bonnie said he had in mind better risk management for growers and also a stronger effort against invasive species in the West, particularly palmer amaranth, a weed that has proven resistant to the weedkiller glyphosate and is becoming widespread in the sugar beet production regions of western Nebraska and eastern Colorado.
Asked whether the Biden administration would support an increase in the sugar floor price in order to increase production, Bonnie said that is part of “a much larger conversation” and an issue on which “no administration” is going to take a position.
Bonnie also noted that USDA has forecast that sugar production in the United States is expected to rise this year, although both he and an SUA leader noted that forecasts are unreliable. At another session here, an analyst said that it is early to make production predictions because not a single sugar beet has been planted.
Bonnie told the sweetener users that he is aware the stocks-to-use ratio is “close to the upper end” of the formula and “we know you have concerns” about the supply and ability to access domestic sugar.
“We face a balancing act, we are trying to be responsive to your concerns,” Bonnie said. “We look forward to working with you.”
Bonnie did not mention increasing sugar imports, a frequent request of the sweetener users. Bonnie shares decision making on that issue with Agriculture Undersecretary for Trade and Foreign Agricultural Affairs Alexis Taylor.
The U.S. sugar program limits sugar imports in order to keep up the price of domestic sugar, but if supplies become tight USDA has the authority to increase imports.
He noted that the COVID-19 pandemic increased the cost of U.S. agricultural production and that high prices for other commodities have put pressure on sugar production.
|Cerminara did not mention in his public remarks any specifics about increased investment, but in a short interview he said he is most concerned about the need for an expansion of cane refining capacity.|
During a discussion of the outlook for the sweetener market in North America, Craig Ruffolo, a commodity specialist for McKeanny-Flavell Company, said that refining capacity is “tight” and that ”you can’t make up refining time.”
Ruffolo noted that all the refining plants in the United States are now owned by growers so that the investment would have to come from them.
Ruffolo said there is a need for more refined sugar in the United States.
Beet growers could also expand their processing plants but making an expansion decision would be more complicated because the beet growers are subject to regional allotments and would have to be assured they have a market for their production, Ruffolo added.
While the sweetener users are meeting in California, members of the American Sugar Alliance, the organization of beet and cane growers, are holding their annual fly-in to Washington to stress to members of Congress that they want the current sugar program continued.
Bonnie also told the sweetener users, an organization made up of processors, refiners, food company executives and traders, that in addition to running the U.S. sugar program he is also in charge of the rest of the farm program and conservation programs.
He repeated Agriculture Secretary Tom Vilsack’s recent statements that even though farm income has been high, it is not evenly distributed and that more than half of U.S. farmers don’t make money on farming and are dependent on off-farm income.
Bonnie also talked about the Biden administration’s commitment to making U.S. agriculture responsive to climate change. Worldwide, he said, agriculture is responsible for 25 to 30% of greenhouse gas emissions, but in the United States, agriculture is responsible for only about 10% of emissions because U.S. agriculture is so efficient.
USDA wants to help American farmers reach the goal of zero emissions by 2050. Noting that the American public is much more interested in addressing climate change than years ago, Bonnie said the Biden administration wants “to create bonds between people who buy commodities and the producers themselves.”
After describing the programs that USDA has launched through the Partnerships for Climate Smart Commodities program, Bonnie said there is a “healthy skepticism” about whether an incentive-based voluntary approach can produce long lasting reductions in greenhouse gas emissions.
“Our approach has to be to prove that model can work,” Bonnie said. “If we don’t prove it up, policy could go elsewhere.”