Sugar policy reform: Will Florida lawmakers fight Modernization Act, Zero-to-Zero?

Ali Schmitz | Treasure Coast Newspapers

Show Caption Hide Caption U.S. Sugar executives discuss farm policy, sugar consumers In this 2016 interview, TCPalm opinion/ engagement editor Eve Samples asks U.S. Sugar executive Malcolm "Bubba" Wade why the federal government should uphold a policy that forces consumers to pay more to support the sugar industry.

Bill Nelson and Marco Rubio led the charge to stop sugar policy reform in 2014.

The Florida senators, with lawmakers from other sugar-producing states, blocked a bipartisan effort to change the U.S. government program that keeps the domestic raw sugar price artificially high, about 35 percent more than the worldwide average.

Once again, there's mounting pressure to change the sugar policy, and once again, the senators are expected to fight it as Congress renegotiates the Farm Bill soon.

The sugar program allows the U.S. Department of Agriculture to:

Limit foreign imports that could undercut U.S. sugar prices.

Limit how much can be sold to prevent an oversupply and price plummet.

Buy excess sugar to prevent a price plummet.

Loan farmers money.

There are two proposals to change that. The Sugar Policy Modernization Act would ease import quotas and eliminate government bailouts. The Zero-to-Zero plan would eliminate price supports, but ban imports from countries that have them, such as Brazil and Mexico.

House shift

As the Republican party moves further to the right, conservative think tanks have funded several studies that show the financial impact of the sugar program on taxpayers.

U.S. consumers and food manufacturers pay between $2.4 billion and $4 billion a year more for sugar, according to a 2017 study by the American Enterprise Institute.

It's unclear whether enough Republicans will side with sugar or the think tanks, but several of the most fiscally conservative lawmakers have lined up to support reform.

North Carolina Republican Rep. Virginia Foxx, the lead sponsor on the Sugar Policy Modernization Act, called the sugar program “crony-capitalism at best, and gross negligence at worst.” Several of the most conservative House members agree.

Her House bill has 78 co-sponsors and the Senate companion bill has 20 supporters.

Rep. Brian Mast, R-Palm City, is the only Florida delegate who has publicly said he supports the bill.

Two other Republicans — Rep. Ron DeSantis of Marineland and Rep. Francis Rooney of Naples — have said they support reform, but haven’t said whether they'll vote for the bill. DeSantis supports sugar reform “to protect taxpayers, enhance market forces and safeguard the environment,” spokeswoman Elizabeth Dillon said.

The sugar industry hopes to win the support of President Trump, saying harmful reforms run counter to his “America First" policies, which include new tariffs on imported steel and aluminum. Trump has been fairly mum about sugar policy reform, but last year applauded a deal that increased the price of imported sugar from Mexico.

New Sugar deal negotiated with Mexico is a very good one for both Mexico and the U.S. Had no deal for many years which hurt U.S. badly. — Donald J. Trump (@realDonaldTrump) June 29, 2017

Renewed efforts

The Alliance for Fair Sugar Policy, which formed to support reform, has launched a massive campaign to persuade Congress to support the bill, reaching out to members through meetings, letters, phone calls and social media.

Alliance members include food industry groups, environmental advocates and conservative associations such as:

Bakers and confectioners, who have been fighting for changes for decades, blaming the sugar program for the decline of U.S. food manufacturing.

Ten Florida environmental groups, who hope reform will curb Everglades pollution and Lake Okeechobee discharges that wreak havoc in the St. Lucie and Caloosahatchee rivers.

Multiple conservative tax associations, which say the program is a waste of taxpayer money and successful industries do not need federal support.

More: Environmentalists ask Nelson: Will you support sugar policy reform?

Florida alliance members say they're disappointed in their lawmakers, with Bullsugar spokesman Peter Girard calling it a "disgusting example" of politicians supporting corporate welfare for their donors.

"We hope this bill passes," he said, "and that voters remember which elected officials gave away public money to billionaires."

Sugar donations

Rubio gets more donations from the sugar industry than any other member of Congress, according to the Center for Responsive Politics.

He has received $281,000 from Florida sugar industry sources since January 2015, and that doesn't include donations to his 2016 presidential campaign.

Over $260,000 of that came from the Fanjul family that operates Florida Crystals Corp. and $21,000 came from sugar industry PACs.

Nelson has received $16,000 from the sugar industry since last year. The industry didn’t make any contributions to Nelson in 2015 or 2016.

The sugar industry also made big donations to Nelson’s Senate challenger, Florida Gov. Rick Scott, whose "Let’s Get to Work” PAC has received $525,000 from U.S. Sugar and Florida Crystals since he was re-elected in 2014.

Scott has received significantly more sugar donations than either Florida senator because corporations can make unlimited donations to Florida PACs, but are limited to $5,000 annually for federal PACs.

Sugar in the Senate

Nelson and Rubio have defended the sugar policy intensely, saying the U.S. should continue to inflate sugar prices as long as other countries do the same.

"If the American sugar industry is wiped out because, for example, the Brazilians heavily subsidize theirs ..." Rubio said on Meet the Press in 2015, "once we are out of the picture, the Brazilians now hold a disproportionate share of the sugar industry, and at that point they can charge whatever they want for it."

Nelson told TCPalm the same, saying he was concerned about "sugar dumping."

"They can go out and dump sugar on the world market at lower prices and run our farmers out of business," Nelson said. "That'll be one thing I'll be looking at when the sugar bill — or for that matter, whatever Farm Bill — comes up."

Some senators from other sugar-producing states agree: Bill Cassidy of Louisiana; John Cornyn of Texas; Amy Klobuchar of Minnesota; and Heidi Heitkamp of North Dakota.

Gov. Scott is reviewing the legislation, but he does not support any bill that could potentially hurt a major Florida industry, campaign spokesman Ryan Patmintra said.

"Florida’s sugar industry is an important piece of our vibrant and growing economy," Patmintra said.

Job losses

Sugar reform opponents and proponents both claim jobs are at stake.

The “Sugar Farmer Bankruptcy Act” would cut jobs, U.S. Sugar spokeswoman Judy Sanchez said. The American Sugar Alliance says the industry employs over 12,000 Floridians.

Other industries say they’re losing more jobs than that nationwide. Brach's, Nabisco and Hershey, for example, have moved their U.S. plants to Canada, Mexico and Central America, where they can buy and import sugar on the cheap and pay lower wages.

The U.S. Census Bureau estimates 123,000 food manufacturing jobs were lost between 1997 and 2015.

Spangler CEO Kirk Vashaw, of the Ohio candy company best known for making candy canes and Dum-Dum lollipops, said he supports the bill because he's seen first hand how the sugar program hurt his own company. He opened a factory in Mexico in 2000, but still manufactures some candy in Ohio.

Vashaw said he doesn't want sugar farmers to lose their jobs, having witnessed how that hurt confectioners, and he knows how outsourcing jobs has hurt communities like his own, where the opioid epidemic is tied to high unemployment levels.

"We really just want a level playing field," Vashaw said.

Market flood, price plummet

The sugar industry claims the bill's easing of import quotas could lead to a massive oversupply of sugar and subsequent price plummet.

Mexican sugar farmers imported millions of pounds of sugar into the U.S. between 2011 and 2014, leading to a major drop in sugar prices, according to a 2015 U.S. International Trade Commission ruling. Mexican companies sold their sugar at less than 60 percent of fair market value, while U.S. sugar farmers struggled to sell their product.

The USDA bailed out the industry, buying hundreds of thousands of pounds of excess sugar for $300 million. The USDA sold the sugar to ethanol producers at a reduced price, by law, resulting in a net loss of $80 million.

Zero-to-Zero

Three Congress members who represent most of Florida's sugar industry workers in the Glades support an alternative proposal.

Republican Tom Rooney of Okeechobee and Democrats Alcee Hastings and Lois Frankel of South Florida co-sponsored the “Zero-to-Zero” bill.

This is the second time Rep. Ted Yoho, R-Gainesville, has sponsored the bill, which did not receive a hearing last year.

Yoho has expressed concerns about the Sugar Policy Modernization Act eliminating loans because he thinks that could increase prices and leave smaller sugar producers struggling to stay in business.

"Congress made a thoughtful decision by keeping sugar policy strong in the 2014 Farm Bill," he wrote in a letter to colleagues. "Congress’ intent in creating the no-cost sugar policy was to provide fair competition to U.S. farmers against foreign subsidies and predatory trade practices."

Rubio has supported the same policy in the past.

While Nelson didn't say he'd sign on to the Zero-to-Zero bill, he said he supports certain aspects of it, and insisted any reform must address foreign sugar “dumping."

“I don’t want to have our agriculture industry unilaterally disarmed,” Nelson said.

Unchanged program

Created in the 1930s, the sugar program was part of a series of price supports to help farmers struggling from the Great Depression.

While other programs have been eliminated or altered over the last eight decades, few changes have been made to the sugar price supports.

President George W. Bush wanted to change that and in 2008 vetoed the Farm Bill, citing sugar as one reason.

"At a time of high food prices and record farm income, this bill lacks program reform and fiscal discipline," Bush said in the veto. "It continues subsidies for the wealthy and increases farm bill spending by more than $20 billion, while using budget gimmicks to hide much of the increase."

Congress overrode his veto.

In 2014, a bipartisan group of legislators filed amendments to eliminate the sugar program from the Farm Bill. They failed in the House and Senate.