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By Robert Rapier on Oct 20, 2007 with no responses

Sugar Producers Want a Piece

The whiff of ethanol dollars floating around Capitol Hill hasn’t escaped the notice of sugar producers in the U.S. The New York Times reports:

Seeing Sugar’s Future in Fuel

LOREAUVILLE, La. — Todd Landry, a farmer who conjures big stands of sugar cane from the muddy fields of southern Louisiana, has been struggling lately against droughts and freezes and hurricanes. Come January he will confront another peril: expanded sugar imports from Mexico.

Mr. Landry and other sugar producers think they have spotted a life raft, and its name is ethanol. Taking a cue from Midwestern farmers who have improved their lot by selling corn to ethanol distilleries, sugar cane and sugar beet farmers want an ethanol deal of their own, paid for by American taxpayers.

I don’t have nearly the problem subsidizing corn growers that I do subsidizing sugar producers. I don’t want to see farmers of a staple crop like corn put out of business by cheap imports. But I don’t think it would hurt us a bit to do with less sugar. We would probably save money on health care costs in the long run.

But the farm bill that is currently being debated contains a juicy piece of pork designed to keep the hands of sugar producers in the taxpayers’ pockets:

A little-noticed provision in the new farm bill working its way through Congress would oblige the Agriculture Department to buy surplus domestic sugar caused by the expected influx of Mexican sugar next year. Then the government would sell it, most likely at a steep discount, to ethanol producers to add to their fermentation tanks. The Bush administration is fighting the measure.

The Congressional Budget Office calculates the cost at $660 million over five years, relatively cheap as farm programs go. But that is an estimate based on assumptions about how much sugar will come across the border. In truth, no one is sure.

“The U.S. Department of Agriculture would be taking on a limitless commitment,” said Robert L. Thompson, a University of Illinois professor of agricultural policy, “to buy any quantity of sugar offered at a guaranteed price, and that would get very expensive, very quickly.”

Why would such a program even be considered? Why else?

The system has been subjected to withering criticism for decades, but the sugar lobby has clout on Capitol Hill. Sugar producers donated $2.7 million in campaign contributions to House and Senate incumbents in 2006, more than any other group of food growers, according to the Center for Responsive Politics, a Washington group.

The USDA isn’t keen on the idea:

Mark E. Keenum, the Bush administration’s under secretary of agriculture for farm and foreign agricultural services, said administering the ethanol program would be “very cumbersome.” Mr. Keenum suggested that the Agriculture Department would end up buying sugar for 22 cents a pound and selling it to ethanol producers for 4 to 7 cents a pound. “You can easily do the math and look at the loss potential,” he said.

Nor are ethanol producers:

Ethanol producers, who could be forced to invest in new equipment to process sugar, say they do not have much use for the idea. “In today’s grain-based biorefineries, the amount of sugar you could introduce into the process would be fairly small,” said Matt Hartwig, spokesman for the Renewable Fuels Association.

Hmm. They would be forced to invest in new equipment that primarily benefits a 3rd party. One wonders then why the RFA thinks it is a good idea to force gas station owners to invest in new E85 pumps, when the amount of E85 that can be supplied is very small. I guess it just depends on whether you are doing the giving or the getting.