Big Sugar has friends in high places
Steve Schell
November/December 1995

Last Friday, Republican Senator Connie Mack and Democratic Senator Bob Graham came together to announce a proposal that would help restore the Everglades and Florida Bay by using part of a fee on all U.S. and imported sugar. The two intend to add the proposal to the budget legislation now pending in Congress. But before we applaud these two lawmakers for their actions, let's look at the big picture.

For the past 60 years, the United States has had a price support system in place for sugar farmers. This program allows the Department of Agriculture (USDA) to lend money to sugar cane growers at 18 cents per pound. Once the crop is harvested, the growers can either repay the money or give the sugar to the government. Since the law that established the program states that tax money cannot be expended, the USDA must keep the price of sugar artificially high by limiting imports of sugar to 1.3 million metric tons per year, rather than taking the sugar from the growers. The supported price in the U.S. ends up being around 22 cents per pound. This is why we pay the price we pay for sugar and products containing sugar at the grocery store. This price support system has also led to the continual increase in production of sugar in South Florida that is directly responsible for the pollution of the Everglades. So we can conclude that the USDA is controlling the market for sugar in this country.

Ask any sugar executive about the importance of this program and they will tell you that without the price supports, they would go out of business. Yet there is no requirement for the sugar companies to disclose any information about their costs or profits. The government is controlling sugar prices but doesn't insist that the companies open up their books to prove the need for such support. All we have are USDA estimates, the most recent of which (1992) places the cost to produce a pound of raw sugar in Florida at 18.8 cents. This same study also found that the cost to Florida sugar companies had declined by about 19% over the previous ten years while at the same time the acreage used for sugar farming in South Florida increased by 28%. Even with the government's price supports, U.S. Sugar, Florida's largest grower with about 165,000 acres, claims that it lost money last year. Joe Lockhart, spokesman for the Coalition to End Welfare for Big Sugar, told Florida Trend magazine, "Either they [U.S. Sugar] aren't telling the truth or they are the dumbest people who ever lived."

Truthful or not, sugar industry executives have been getting what they want for years. Consider Flo-Sun, U.S. Sugar's largest competitor. Flo-Sun is owned by the Fanjul family, who emigrated from Cuba in the early 1960s. Their empire has grown from 4000 acres to 190,000 acres in Florida and another 240,000 acres in the Dominican Republic. Given that Flo-Sun produced around 630,000 metric tons of sugar last year in Florida, doing the math will show revenues of over $300 million with profits before taxes of around $70 million. U.S. Sugar's claims of going bust just don't make sense. The Fanjuls are a good example of money influencing politics. CEO Alfie Fanjul was one of the Democrats' key fund raisers in Florida in the 1992 elections. Brother Pepe was an important financial backer of George Bush and recently co-hosted a fund raiser for Bob Dole. Jorge Dominicis, vice president of Flo-Sun, says that all the fuss about the Fanjul sugar empire is "an example of immigrant bashing that plays on the fears and prejudices of many Americans."

Here's an example of how this system affects business in the U.S. Bobs Candies, in Albany, Georgia, is the world's largest manufacturer of candy canes. Bobs has a small Jamaican plant as well, which buys refined sugar from a mill in Savannah for about 16 cents per pound. But because of the price support program, his Albany plant must pay an average of 10 cents more per pound for sugar from the same mill. It seems that Bobs would be better off making all of its candy canes in Jamaica.

Manufacturers such as Bobs formed coalitions to fight the price supports and were joined by environmental groups and consumer groups as well. Environmentalists point to the two thirds reduction in the flow of fresh water from Lake Okeechobee to the Everglades as a direct result of sugar farming in the region. With all the opposition, the chance that the program would remain untouched in this years budget legisation seemed to be dwindling. Sugar growers began circling the wagons, hinting that there may be room for a compromise. They also began to strike alliances with influential lawmakers. As a result, when the Senate Agriculture Committee considered the Farm Bill last month, the sugar growers emerged virtually untouched. Committee Chair Richard Lugar, R-Indiana, (supported by Rep. Peter Deutsch, D-Fla.) had proposed a 2 cent per pound fee on all Florida cane sugar to help clean up the Everglades. But with Big Sugar's friends on the committee, Lugar's plan didn't have a chance. The only other committee member to fight the industry, Senator Rick Santorum, R-Penn., finally conceeded defeat and merely voted "present" when the bill came up for consideration. The only mention of sugar in the resulting bill was to reduce the price supports from 18 cents to 17 cents per pound. It would extend the price support program until 2002.

So here sit Graham and Mack with their proposal to raise a deficit reducing fee paid by sugar producers by a pitiful tenth of a cent per pound. About $35 million of this fee would be used to buy only 32,000 acres from Talisman Sugar in South Florida. Graham had earlier considered another plan by which the South Florida Water Management District (SFWMD) would buy foreign sugar for 12 to 15 cents per pound, resell it in the U.S. at the supported price of 22 cents per pound, and use the profits to clean up the Everglades. The problem with all these plans is that the consumer is the one who pays. Graham said at a news conference on Friday, "We believe it is appropriate that the sugar industry as an industry have a common responsibility for the removal of those environmental degradations that they may cause." The SFWMD plan would have the consumer pay by buying foreign sugar at an artificially high price. The recent Mack-Graham proposal leaves the price support program intact, the consumer still paying the higher price. At the rate this plan goes, the damage to the glades will continue unabated.

It is still possible that the full House or Senate will vote to change sugar price supports. However, with this legislation being made a part of the giant budget-balancing agenda, senators and representatives will have little time to consider details such as this. Call or write to your senators and representatives and ask them these questions:

1. Why did you not support a two cent per pound fee on raw sugar to fund a cleanup of the Everglades?

2. Why do you insist on making the consumer pay for environmental damage done by sugar growers?

3. How can you justify the price support program for sugar producers while not requiring them to prove the need for such a program?