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Big Sugar Is Set for a Sweet Bailout

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#1 concert andy

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Posted 13 March 2013 - 01:20 PM





The U.S. Department of Agriculture is considering buying 400,000 tons of sugar—enough for 142 billion Hershey's Kisses—to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program.
The action aims to prop up tumbling U.S. sugar prices, which have fallen 18% since the USDA made the nine-month operations-financing loans beginning in October. The purchases could leave the price-support program with an $80 million loss, its biggest in 13 years, said Barbara Fecso, an economist at the USDA, in an interview.
The move would benefit companies that turn sugar beets and sugar cane into granulated sweetener, a business plied by American Crystal Sugar Co., Amalgamated Sugar Co. and U.S. Sugar Corp. The USDA wouldn't say how many companies have received loans, or identify them. U.S. Sugar said it doesn't have any USDA loans outstanding. American Crystal and Amalgamated didn't respond to requests for comment.
Higher prices would hit food companies including candy giants Mars Inc., Hershey Co. and Nestlé SA, and could ultimately boost retail food prices, at a time when many consumers are financially stretched.
"Clearly, the USDA has made up its mind that Big Sugar is going to trump the American consumer," said Pierson Bob Clair, president and chief executive at Brown & Haley, a confectioner in Tacoma, Wash., that makes Roca butter-crunch candy.
The USDA makes loans to sugar processors annually as part of a program that is rooted in the 1934 Sugar Act. The loans are secured with some 4.1 billion pounds, or 2.05 million tons, of sugar that companies expect to produce from the current harvest. That comes to almost a quarter of total U.S. output that the USDA forecasts for this year.
If domestic sugar prices bounce back before a final decision is made, the USDA would back away from plans to intervene in the market, Ms. Fecso said. A final decision could come as early as April 1.
The domestic sugar industry has long relied on subsidies that critics say are disproportionate to its contribution to the U.S. economy. The sugar industry supports jobs for 142,000 people, according the American Sugar Alliance, an industry group.
The loan program was designed to operate at no cost to taxpayers. A June 2000 study by the Government Accountability Office, then called the General Accounting Office, estimated the program's cost to the U.S. economy at $700 million in 1996 and $900 million in 1998.
The National Confectioners Association, which represents about 350 candy companies, including Mars, Hershey and Nestlé, estimates that the U.S. Sugar Program has cost consumers about $14 billion since the Farm Bill's passage in 2008.
Phillip Hayes, spokesman for the American Sugar Alliance, said the secretary of agriculture "is going to administer sugar policy the way Congress designed. Congress specifically designed sugar policy to run at the lowest possible cost to American taxpayers."
A bumper crop of sugar beets in the upper Midwest and a big sugar cane harvest has sent U.S. prices tumbling. The futures contract for U.S. raw sugar on Tuesday finished at 21.03 cents a pound, compared with about 25.50 cents a pound when the USDA loans were disbursed.
World raw-sugar prices ended flat on the day at 18.82 cents a pound. U.S. prices tend to be higher than world prices because the U.S. restricts sugar imports as part of the price-support program.
Any defaults on loans this year would be the first test of a provision in the 2008 Farm Bill that requires the USDA to sell forfeited sugar to ethanol producers. Most ethanol in the U.S. is distilled from corn.
To entice ethanol producers to buy sugar to mix in with corn, the USDA expects it will have to take a 10-cent loss on every pound of sugar it sells, bringing the total to $80 million if 400,000 tons are purchased, Ms. Fecso said.
Ms. Fecso said the USDA is hoping to avert a repeat of 2000, the last time the agency bought sugar on the open market. The USDA bought 132,000 tons of sugar to raise prices, but the effort was generally considered unsuccessful because borrowers ended up handing over 1 million tons of sugar to the agency instead of repaying the loans.
The loan program incurred losses of $295 million that year.
"If the USDA has to intervene…we're going to be unfairly leaving consumers and businesses on the hook to foot the bill and that is unacceptable," said Sen. Jeanne Shaheen (D., N.H.), co-sponsor of a bill that would give the USDA more flexibility in handling the sugar program.

#2 Tim the Beek

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Posted 13 March 2013 - 01:43 PM

Words fail me. So I'll use pictures instead...


:picardfp: :shit: :fairlight: :wallbash: :wallbash: :wallbash:

#3 Tim the Beek

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Posted 13 March 2013 - 01:45 PM




  Feds to farmers: Grow GMO beets or face sugar shortage

By Tom Laskawy



If you’re Monsanto, you’re probably really proud of your genetically modified (GMO) sugar beets. Introduced in 2008, the beets are the company’s most recent Roundup Ready product genetically engineered to withstand the direct application of the herbicide glyphosate. Immediately successful, they took over the sugar beet market within two years. By 2010, 95 percent of the sugar beets grown in the U.S. were Monsanto’s genetically modified variety.

This matters to us all because about 50 percent of white sugar sold here is made from sugar beets. In other words, unless that bag of sugar you just bought is labeled “Certified Organic” or “100 percent cane sugar,” it almost certainly contains sugar made from GMO crops.

There was, of course, a reason for Monsanto’s success with sugar beets — and not just because it was able to leverage its market power to encourage farmers to adopt the new seed. Once again, it’s a weed problem.

Weeds in sugar beet fields have developed resistance to the chemicals farmers have been using for years, but they’re not resistant to glyphosate, which hasn’t been used very often in conventional sugar beet cultivation. As a result, these Roundup Ready seeds allowed farmers to use a chemical — glyphosate — that their weeds hadn’t really been exposed to and thus represented a bit of a game-changer for sugar beet farmers who had been left out of Big Ag’s glyphosate party.

Despite its instant success, Monsanto’s product hit a few speed bumps in 2010. That year, a federal judge revoked the U.S. Department of Agriculture’s (USDA) approval for the seed in response to a lawsuit filed by the Center for Food Safety on the basis that the agency violated the law by failing to perform a full environmental impact statement for the seed. This is a critical oversight given the risks of genetic contamination of conventional and organic seeds by the GMO seeds through wind-blown pollen, as well as the current superweed crisis caused by overuse of glyphosate.

The problem with the judge’s order, however, was that Monsanto had so successfully crowded out sugar beet seed competitors that once he ruled the beets “illegal” it quickly became clear that there were no conventional sugar beet seeds to be found. So America faced the prospect of total Armageddon the zombie apocalypse cats and dogs sleeping together a 20 percent reduction in that year’s sugar crop. In response — and in defiance of the federal judge’s order — the USDA allowed farmers to plant GM sugar beets anyway.

Well, I’m happy to report that our long national nightmare is over. At last, the USDA has released its full environmental review of Roundup Ready sugar beets. In it, the agency describes the risks for genetic contamination as well as the likelihood of increased herbicide resistance in weeds that will result from unrestricted planting of the beets. And as a result, the USDA is recommending full “deregulation” of GMO sugar beets, which will allow for their unrestricted planting.

Wait. What?

The environmental review puts a high priority on the absence of alternative seeds and the potential disruption to sugar supplies — an absence that has been shaped by consolidation in the seed industry. It also observes that any weed resistance that develops if more Roundup Ready seed is planted can be countered by applying more types of herbicide! The chemical treadmill FTW!

As this review illustrates, the agency behaves as if its “hands are tied” on GM seed approvals. As George Kimbrell, senior attorney for the Center for Food Safety and a plaintiff in the sugar beet trial, describes it, the agency claims “regulatory impotence.” The USDA’s arguments in the recent court case involving GM alfalfa echo this sentiment. In short, the agency asserts that it lacks authority to fully assess the risks of GM seeds because Congress has ruled that the agency can’t let the larger potential impacts enter its analysis.

Kimbrell isn’t buying it. “We strongly disagree with USDA’s claims of regulatory impotence,” he told me in an email. This claim, he added, is “contrary to the statute and Supreme Court, in addition to being extremely bad policy. USDA’s job is to protect all farmers and the environment, not just biotech special interests.”

It’s hard, for example, to reconcile the environmental review’s dry discussion of superweeds in GM sugar beet fields with the far more dire warnings that came out of the recent National Academy of Science summit on the topic. And it’s also hard to take seriously the USDA’s claim that farmers will take voluntary steps to ensure GMO sugar beets aren’t planted too closely to conventional ones (or related species like chard and other beets).

But here’s the really bad news: Full “deregulation” of the seed will eliminate existing distance requirements between fields of conventional crops and the GMO crops, which are meant to help prevent genetic contamination (aka gene flow). And while the USDA maintains that farmers will continue to observe these limits on their own, farmers have demonstrated that the temptation to plant more and more widely tends to outweigh all concern about contaminating the plots of their neighbors.

The Center for Food Safety is still reviewing the USDA’s 800-page decision. That said, advocates have unearthed past evidence of sloppy science and close ties to Monsanto within the arm of the USDA responsible for producing the review. And history does not offer much reassurance that the agency is putting its best effort into a full examination of the risks from further expansion of GMO seed.

In the end, maybe the answer lies not within the USDA but outside it. Perhaps farmers and food processors will be less enamored of GMO sugar beets if California passes the GMO food labeling law currently on the ballot there. Then bags of sugar with the phrase “contains genetically modified ingredients” will do what the agency charged with “protecting all farmers and the environment” simply won’t — and that’s to give farmers pause in embracing crops that offer short-term convenience and long-term complications.

Tom Laskawy is a founder and executive director of the Food & Environment Reporting Network and a contributing writer at Grist covering food and agricultural policy. His writing has also appeared in The American Prospect, Slate, The New York Times, and The New Republic. Follow him on Twitter.

#4 concert andy

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Posted 13 March 2013 - 02:36 PM

Words fail me. So I'll use pictures instead...


:picardfp: :shit: :fairlight: :wallbash: :wallbash: :wallbash:




Talk about manipulating the market price.  Let the price drop.  What happened to the free market place?


Why does the government subsidize most things grown in the US?  

#5 TakeAStepBack

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Posted 13 March 2013 - 02:55 PM

The government subsidizes or give out tax breaks and other favoritist actions throughout the entire economy. In ever sector. There is no free market at work what so ever in the US, or abroad, really, at this point. Eventually this is going to lead to a systemic failure.