HOUSE PLAN FOR SUGAR HIT MAY SPUR RISE IN PRODUCTION

HOUSE PLAN FOR SUGAR HIT MAY SPUR RISE IN PRODUCTION

The House Agriculture Committee's proposal for the 1990 farm bill's sugar program is hugely expensive, illegal under world trade rules, may boost U.S. sugar output by 25 percent and force the federal government to buy millions of tons of surplus sugar, according to a new United States Department of Agriculture letter.

In some of its strongest words to date on the subject, USDA trashed the sugar plan pieced together by members and sugar lobbyists over the past few weeks as unworkable and "unacceptable." The plan was approved recently by the panel's subcommittee on cotton, rice and sugar.''The bill proposes to index sugar price support levels to the Consumer Price Index less two (percentage points). This would significantly increase price support levels . . . ," USDA Undersecretary Richard Crowder said in a letter to committee Chairman Kika de la Garza, D-Texas. Absent production controls, the plan "could lead to a projected 14 percent to 25 percent increase in production (between 1 million and 1.7 million tons) over the life of the bill," Mr. Crowder said in the letter dated Tuesday.

The House draft, designed to run sugar programs through 1995, is a mixed bag of provisions from a host of farm-state lawmakers. Essentially, it would raise sugar supports and set a floor on the level of imports, but still require USDA to run the program so that no direct costs show up on the federal budget. To manage that, the plan lets USDA restrict the marketing of U.S. sugar when needed.

But given the proposed price hikes, marketing controls "would have to be Draconian and would require a costly bureaucracy to administer," Mr. Crowder said. The plan also may force USDA to buy 1.5 million to 3.4 million tons of surplus sugar over the bill's life, with its disposal costing USDA anywhere from $450 million to $970 million. Consequently, disposing of the surplus could hurt sugar and corn prices here, he said.

Besides domestic supports, Mr. Crowder also derided some lesser-known parts of the sugar title as too expensive or a violation of world fair trade rules.

Those include a new re-export program for up to 500,000 tons of sugar, an "ad hoc" disaster payment program for sugar cane farmers and a plan pushed by Rep. Tom Lewis, R-Fla., that could take away U.S. sugar import allocations from nations that are net importers of sugar from Cuba. The proposal would hurt U.S. allies, including Canada, Jamaica, Mexico, Nicaragua, Peru and Venezuela, and "affect important foreign policy interests of the United States," the undersecretary said.

In his letter, Mr. Crowder restated USDA's desire for an immediate 10 percent cut in the current U.S. sugar support price of 18 cents per pound. He also reemphasized that the department supports no major changes to the current program before December, when international farm reform talks are set to conclude.

The full House committee was set to consider language Thursday for the 1990 farm bill sugar program.

U.S. sugar producers derided the Crowder letter, accusing USDA of distorting the House plan. "They have taken liberty with the facts," said Dalton Yancey, president of the Florida Sugar Cane League. Mr. Yancey disputed the notion the House plan would force USDA to take charge of up to 3.4 million tons of surplus sugar, saying USDA wouldn't have to assume any stocks. Mr. Crowder's figures are "completely off," he said.

Moreover, Mr. Yancey said he is "absolutely amazed" the Bush administration would push cuts in the price support "when they are trying to have people elected to Republican office." He said USDA's idea may hurt prospects for Republican Senate hopefuls, particularly in Hawaii and Michigan. ''They've got some very close Senate races going on . . . then they shoot their candidates in the foot," Mr. Yancey said.