Piling On: U.S. Sugar Fix Idea Goes From Headline To Punchline


Anybody hear how NBC funnyman Jay Leno piled it on the sugar program last night? Sugar went from headline to a national punchline, along with the GOP the U.S. Senate “fighting” to keep open a barbershop from sequestration. “It’s only losing $350,000 a year; do you know what that makes it? The most successful government program ever,” Leno said. The Senators argue they need the barbershop, Leno says, because of the “unusual hours they work,” and any hours they work would be “unusual.”

Regarding sugar, Leno commented about the U.S. Department of Agriculture’s potential plan to deal with plummeting sugar prices and the prospect of sugar loan program defaults.

“I saw this in the paper today,” Leno said, “the Department of Agriculture wants to use our tax money to buy 400,000 tons of sugar to limit supply and boost prices so sugar producers so can pay back government loans that they could default on: Do you follow me here, on this?

“We loan them money and now we’re giving them more money so they can pay back our loan. Do you still wonder why we’re $16 trillion in debt? Any questions?”

Luther Markwart, executive vice president of the American Sugarbeet Growers Association in Washington, D.C., who described the peril of plummeting prices at the International Sugarbeet Institute in Fargo last week, says this isn’t the first time a comedian has targeted sugar.

“He pokes fun at everybody,” Markwart says, of Leno. “I think anybody that’s serious about this looks at the whole situation. The department is looking at all of the alternatives. The Mexican harvest is not done yet. Everybody wants to get out and say this is what’s going to be done. People have to be patient to see how they work through this.”

The Wall Street Journal piece (March 12: “Big Sugar Set for a Sweet Bailout”) that probably prompted the Leno story was wrong on a number of accounts, Markwart says. The WSJ story confused the raw and refined sugar markets and didn’t put the U.S. prices in their proper context, Markwart says. It tied U.S. sugar surpluses solely to domestic sugar production, which is only one reason for a surplus. “It’s all this sugar coming from Mexico, which exports more to us than the rest of the rest of the countries under the WTO ship to us,” Markwart says. WTO countries bring in 1.25 million tons a year, and Mexico has at times exceeded that since 2008. Markwart had said that the USDA had made a decision on the market that used information about the Mexican exports to the U.S. that turned out not to be correct.

As for the “feedstock flexibility” option of buying stocks that the USDA is consider, it may be cheaper than a forfeiture, Markwart says. Allowing the forfeitures to go forward could turn a one-year problem into a multiple year problem, with the possibility of more forfeitures in a subsequent year.