Letter to Colleague - Cramer Led Effort to Oppose Anti-Sugar Amendment in Farm Bill

Letter

Dear Colleague:

The House is expected to consider the Foxx-Davis amendment to the Farm Bill that would seriously injure farmers in my state and around the country. I urge you to oppose it.

The sponsors of this amendment like to describe U.S. sugar policy as a Soviet-era policy. But, U.S. sugar policy is actually Washington-era policy -- because George Washington was president when the first form of U.S. sugar policy was put in place. Yes, it is true the policy did not actually apply to sugar until President Jefferson made the Louisiana Purchase -- but some form of sugar policy has been in place ever since that time.

It is important to recognize that this policy I refer to is not actually farm policy at all -- it is trade policy. A long time ago, the leaders of this country recognized the nature of the world sugar dump market. Here is what they saw: foreign countries producing sugar, taking care of their domestic needs at higher internal prices, and then dumping the rest onto the world market at whatever price it can fetch -- usually at prices below their costs of production. Regrettably, little has changed. The global sugar market was then and is now a distorted mess -- and our trade policy has always recognized that fact.

Our trade policy has also recognized that it is fair game for our very efficient sugar farmers to compete mano-a-mano with foreign sugar farmers. But, it is not fair to expect our sugar farmers to have to compete with foreign treasuries that subsidize their sugar to the point where that sugar can be sold onto the U.S. market at below their cost of production. We have always recognized that for what it is: it's called cheating.

Our sugar farmers stand alongside our farmers of other crops as among the most efficient in the world. In the face of high and rising foreign subsidies, our country's trade negotiators have worked -- and they continue to work -- to reduce foreign subsidies to give our nation's farmers a level playing field on which to compete. And our trade negotiators have made significant concessions to other nations in return. In the case of sugar, the United States has become among the top three importing countries in the world on account of major U.S. concessions -- although I guarantee our sugar farmers would love to supply the entire market. But, our trade commitments do not allow that. Our country has made trade commitments to sugar producing countries around the world to buy their sugar. And a deal's a deal. Here in America we live by our trade agreements even when our trading partners do not.

So, the question is, how do you build a farm policy that fully honors our trade commitments and at the same time provides our farmers with a modest safety net? The answer to this question is the non-recourse loan which is administered by USDA at no cost to the American taxpayer. How does the loan work? Sugar producers take out a loan after harvest and they pledge their crop as collateral. Farmers are then able to begin repaying their debts, and they also have 9 months in which to market their crop. When the loan matures, it is fully repaid with interest.

In recent times, the only fly in the ointment has been when other countries cheat. This was the case in 2013 when Mexico was found guilty by our government of illegally dumping heavily subsidized sugar onto our market at below Mexico's cost of production. In that year, farmers could not repay their loans in full and had to forfeit the crop they pledged as collateral. And, in that year alone, sugar policy cost money -- albeit a very small amount despite the costly injury done by Mexico to U.S. farmers.

So, what's the controversy? The big sugar users -- the companies that use sugar to make their products -- want to buy their sugar for even less than they do now. This is despite the fact that they are already paying lower wholesale prices for sugar than companies elsewhere around the world.

So, what do they propose? First, the sugar users would put our farmers back into a safety net that was put in place in 1985 -- this despite the fact that costs of production have skyrocketed over the past 33 years. However, we certainly do not expect sugar users plan to sell their products to consumers at 1985 prices. Second, the sugar users want to go above and beyond our trade commitments in order to flood the domestic market with heavily subsidized sugar from the world dump market in order to artificially depress the domestic prices our farmers receive. They would do this by eliminating any objective standard as to when imports above our trade commitments are needed -- even if that means costing taxpayers money.

The effect of the Foxx-Davis amendment then is to put U.S. sugar farmers out of business -- and put American taxpayers on the hook. Why? Simply to add to already strong profits that these companies are reporting to their shareholders.

Today's U.S. sugar policy is a zero cost policy to taxpayers. American consumers -- at the wholesale and retail levels -- are paying less for sugar than counterparts around the world. So, this is not about taxpayers or lowering consumer prices at the grocery store -- after all, these companies have never passed on a dime to consumers due to lower sugar prices they pay. Instead, this is just a little extra profit to be made at the expense of farmers, taxpayers, consumers, and free trade.

If my colleagues still have concerns about sugar policy, then why not do something productive about it? Rep. Ted Yoho has introduced common sense legislation that should have the support of every Member of this chamber. It is straightforward: It says that when other major sugar producing countries eliminate their subsidies, the President may dismantle U.S. sugar policy.

Opponents smirk at this proposal -- but that's how trade negotiations work. That's how any successful negotiation works. But, if my colleagues on the other side of this issue want to enshrine forever high foreign subsidies, tariffs, and non-tariff trade barriers, then absolutely: vote for Foxx-Davis and unilaterally disarm American farmers so we have absolutely nothing to negotiate with in order to level the playing field and create a genuine free market.

That's the history of U.S. sugar policy in a nutshell under every president since George Washington, with a few tweaks along the way. In fact, most recently, President Trump was decisive in support of U.S. sugar policy and American farmers when he successfully negotiated an end to Mexican dumping of sugar.

The bottom line is if the proponents of the Foxx-Davis amendment want to one up every President from Washington to Trump, then the place to start is by tearing down the high and rising foreign subsidies of our trading partners. But, sadly, instead, Foxx-Davis would unilaterally disarm U.S. sugar farmers and threaten to sacrifice an important American industry on the altar of unfair foreign trade.

I urge you to join me in defeating this deeply flawed amendment.

Sincerely,

Kevin Cramer

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