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 
  

