U.S. SUGAR PROGRAM CUT SENT TO CONGRESS BY USDA
The U.S. Agriculture Department 
formally transmitted to Congress a long-awaited proposal to
drastically slash the sugar loan rate and compensate growers
for the cut with targeted income payments.
    In a letter to the Congressional leadership accompanying
the "Sugar Program Improvements Act of 1987", Peter Myers,
Deputy Agriculture Secretary, said the Reagan administration
wants the sugar loan rate cut to 12 cents per pound beginning
with the 1987 crop, down from 18 cts now.
    Sugarcane and beet growers would be compensated by the
government for the price support cut with targeted income
payments over the four years 1988 to 1991. The payments would
cost an estimated 1.1 billion dlrs, Myers said.
    The administration sugar proposal is expected to be
introduced in the House of Representatives next week by Rep.
John Porter, R-Ill.
    Congressional sources said the program cut is so drastic it
is unlikely to be adopted in either the House or Senate because
politically-influential sugar and corn growers
and high fructose corn syrup producers will strongly resist.
    The direct payment plan outlined by the administration 
targets subsidies to small cane and beet growers and gradually
lowers payments over four years. It also excludes from payment
any output exceeding 20,000 short tons raw sugar per grower.
    For example, on the first 350 tons of production, a grower
would receive 6 cts per lb in fiscal 1988, 4.5 cts in 1989, 3
cts in 1990 and 1.5 cts in 1991.
    The income payments would be based on the amount of
commercially recoverable sugar produced by a farmer in the 1985
or 1986 crop years, whichever is less, USDA said.
    Myers said the administration is proposing drastic changes
in the sugar program because the current high price support is
causing adverse trends in the sugar industry.
    He said the current program has artificially stimulated
domestic sugar and corn sweetener production which has allowed
corn sweeteners to make market inroads.
    U.S. sugar consumption has declined which has resulted in a
"progressive contraction" of the sugar import quota to only one
mln short tons this year, he said. This has hurt cane sugar
refiners who rely on imported sugar processing.
    Furthermore, USDA said the current sugar program gives
overseas manufacturers of sugar-containing products a
competitive advantage. The result has been higher imports of
sugar-containing products and a flight of U.S. processing
facilities overseas to take advantage of cheaper sugar.
    USDA also said the current program imposes a heavy cost on
U.S. consumers and industrial users. In fiscal 1987, USDA said
consumers are paying nearly two billion dlrs more than
necessary for sugar.
    "Enactment of this bill will reduce the price gap between
sweeteners and help to correct or stabilize the many adverse
impacts and trends which the sugar industry is currently
facing," Myers said.
    The following table lists the rate of payments, in cts per
lb, to growers and the quantity covered, in short tons
recoverable raw sugar, under the administration's proposal to
compensate sugar growers with targeted payments.
    QUANTITY            1988     1989      1990      1991
First 350 tons         6.000    4.500     3.000     1.500
Over 350 to 700        5.750    4.313     2.875     1.438
Over 700 to 1,000      5.500    4.125     2.750     1.375
Over 1,000 to 1,500    5.000    3.750     2.500     1.250
Over 1,500 to 3,000    4.500    3.375     2.250     1.125
Over 3,000 to 6,000    3.500    2.625     1.750     0.875
Over 6,000 to 10,000   2.250    1.688     1.125     0.563
Over 10,000 to 20,000  0.500    0.375     0.250     0.125
Over 20,000 tons        nil      nil       nil       nil 
 Reuter
