Senate Agriculture, Nutrition and Forestry Committee

Chairman Dick Lugar, U.S. Senator for Indiana

Date: 7/25/00

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U.S. Sen. Dick Lugar delivered the following statement today at a Senate Agriculture, Nutrition and Forestry Committee hearing to overview the federal sugar program:

Today, the Committee will hear testimony regarding the structure and status of the domestic sugar industry and the future role of the federal sugar program in the industry.

Events this year indicate that the sugar program is becoming increasingly unmanageable and that radical reforms are needed urgently. This spring, USDA offered to purchase 150,000 tons of sugar to stabilize prices and prevent sugar loan forfeitures. The Department spent $54 million to purchase 132,000 tons of sugar but the price increases in the sugar markets anticipated have not occurred. In its mid-session review of the federal budget, the Clinton Administration estimates that the sugar program will cost over $140 million this fiscal year for purchases and loan forfeitures. Proponents of the sugar program can no longer boast of the "no cost" aspect of the program. But this is just the beginning. The mid-session review projects that the current program will cost taxpayers over $1 billion and result in the accumulation of over 5 billion pounds of sugar in government inventory between now and 2005. We can no longer permit this program to continue on this indefensible path.

In announcing the offer to purchase sugar in May, Secretary Glickman stated, "Simply relying on continued government purchases over the longer term is neither feasible nor realistic." I strongly agree with the Secretary's assessment and hope that the witnesses will present alternatives to the present policies that have failed producers, sweetener users, consumers and taxpayers.

It is widely rumored that discussions are underway at the Department with segments of the industry to institute a "payment in kind"or PIK program for sugar in an attempt to reduce the supply of sugar. Such a program would be ill-conceived and would highlight the desperate nature of efforts to preserve the program at any cost.

Under our current international trade commitments, we must soon permit increasing imports of foreign sugar to enter the U.S. market. Obligations under the World Trade Organization and North American Free Trade Agreement, coupled with record-high domestic production projections will result in a sugar supply far in excess of demand. A long-term, viable and rational solution to the matter must be implemented in the very near future.

An additional perspective relates to the fact the Everglades are dying. The steady natural flow of water has been disrupted. Water that could be used to restore the natural environment is being flushed to the sea. Lack of adequate water storage results in discharges of polluted waters into Lake Okechobee and surrounding waterways and makes water management more difficult during storms and hurricanes.

In the 1996 Farm bill, this Committee supported the inclusion of $200 million to purchase lands in the Everglades Agricultural Area to help in the process of restoring the Everglades. This was a thoroughly bipartisan effort and one which required the close cooperation of federal and state officials. Florida Governor Jeb Bush called the recent purchase of these lands the "linchpin of Everglades restoration."

We need to consider the option of making further purchases of lands from willing sellers in the Everglades Agricultural Area with the savings that might accrue from sugar policy reform. I believe that sugar policy reform can play an important role in Everglades restoration.

We have a large number of witnesses here today to present statements on the sugar industry and the sugar program. We welcome them and look forward to their testimony.

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