News: Analysis & Commentary: SUBSIDIES
BIG SUGAR MAY BE ABOUT TO TAKE ITS LUMPS
On Mar. 29, Representative Dan Miller (R-Fla.) stood in a crowded Capitol Hill office and made what amounts to a near-treasonous declaration to many Floridians: He vowed to kill a federal subsidy program that provides a $1.4 billion annual windfall to U.S. sugar growers. "It's corporate welfare," he charged. That sent Big Sugar's lobbying machine into overdrive. An hour later, a GOP colleague from an adjoining district, Mark Foley, denounced Miller for aiding subsidized European farmers at the expense of the U.S. sugar industry.
The exchange dramatizes the growing battle in Congress about whether to kill sugar growers' sweet subsidies. Although opponents have failed to do so many times before, GOP efforts to balance the budget make the program suddenly vulnerable.
WELFARE? The sugar-subsidy issue is explosive because it pits a strange alliance of GOP free-marketers and liberal Democrats against supporters of powerful, parochial interests. In addition, the issue has one industrial group--the growers--in combat with another--big sugar buyers. "Sugar's going to become the poster boy for corporate welfare," predicts Thomas A. Hammer, president of the Sweetener Users Assn., which represents big corporate buyers of sugar. Their goal: to pay the lowest possible price for sugar.
Such interests have won the support of House Majority Leader Richard K. Armey (R-Tex.), who has led the charge to abolish what he calls "the most costly cartel to American consumers since OPEC." Miller and Representative Charles E. Schumer (D-N.Y.) plan to co-sponsor a bill in mid-May to kill the sugar-subsidy program, and a similar bill will be introduced in the Senate. "The political landscape has changed," says one Senate aide.
Sugar farmers know they've had a great deal for years. While the government doesn't give cane and sugar-beet farmers direct cash subsidies, it provides them with low-cost loans from the U.S. Treasury, guarantees a price much higher than the world market's, and restricts imports. The result: A 1993 General Accounting Office study found that inflated sugar prices cost American consumers $1.4 billion a year.
ODD BEDFELLOWS. In the past, growers fended off attacks by arguing that without the program, European producers would dump their own subsidized sugar onto the world market. But that argument is losing sway. Powerful corporate buyers such as Coca-Cola, Hershey Foods, Kraft Foods, and Nabisco Foods have teamed up with consumer groups and environmentalists for the first time. The odd bedfellows call themselves the Coalition to End Welfare for Big Sugar and have run ads attacking the subsidy.
Sugar is fighting back. At a congressional hearing on the subject held in Florida on Apr. 27, more than 500 farmers turned out to plead with lawmakers to save their jobs. Industry heavy hitters such as J. Nelson Fairbanks, president and CEO of U.S. Sugar Corp., have met with key Washington lawmakers several times. And Pepe Fanjul, CEO of Flo-Sun Inc., a huge sugar grower in West Palm Beach, Fla., hosted a March fund-raising dinner for Senate Majority Leader Bob Dole's Presidential bid. Rep. Armey calculates that the Fanjul family receives as much as $64 million in annual benefits, though they dispute the figure.
The growers also have a long history of generous campaign contributions. Sugar PACs and a few individual donors have contributed $11.3 million to congressional candidates and $1.3 million to current House and Senate Agriculture Committee members since 1979, according to the Washington- based Center for Responsive Politics.
But generous donations may not save sugar this time. House Agriculture Committee Chairman Pat Roberts (R-Kan.), a powerful ally for sugar producers, says the growers' best hope is to accept cost-cutting reforms "or their programs may go the way of honey, wool, and mohair." A bittersweet choice, to be sure.By Mary Beth Regan in Washington