Farmers: Beet-Red, Raising Cane

The sweets and sours of the Administration's sugar program

The retail price of sugar in the U.S. has careened between 17-c- and 63-c- per lb. during the past four years, a statistic well known to the often riled housewife. It is the cost at the supermarket that makes the headlines. But behind those prices can be multimillion-dollar battles between commercial and political rivals that escape public notoriety. And in this case there are. The very bitterness of the sugar-pricing controversy can be seen in one of the last official acts by the late Senator Hubert Humphrey, who in a statement accused the Carter Administration of "bungling and ineptitude" and acting "contrary to the expressed intent of Congress" in its sugar policies.

Pending before the Senate now is an international agreement that would stabilize sugar prices through voluntary limits on exports to the U.S. by foreign producers, chiefly the Philippines and the Dominican Republic. But the Senators, reflecting the anger with the President felt by Congressmen from farm states, are in no mood to support the pact until the Administration establishes a policy ensuring that U.S. sugar producers will not be hurt by foreign competition.

Sugar has been a sticky problem for Congress for years. As the world's biggest importer (11 million tons a year), the U.S. used to control its vast imports by doling out quotas to exporting nations. That system broke down in 1974 when the price of sugar shot up, partly because of crop failures, to a record 64.5-c- per lb. Overproduction then sent prices dropping again. By the time Carter took office, they had fallen to about 10-c- per lb., some 3 1/2-c- below the break-even point for domestic growers. Recalled Agriculture Secretary

Robert Bergland: "The sugar situation was an economic disaster."

Both Bergland and the U.S. International Trade Commission urged Carter to reimpose import quotas, but the President refused, arguing reasonably enough that quotas would be too protectionist. Instead, he ordered a 2-c--per-lb. subsidy, which was supposed to enable efficient domestic producers to make a profit on their crops. But the nation's 5,000 sugarcane and 15,000 sugar-beet growers found that world prices were continuing to drop so fast that even with the subsidy they were losing money. At the same time, the major sugar-user firms, such as the Coca-Cola Co., General Foods Corp. and Nestle Alimentana, were more than happy with Carter's program because it kept prices low and increased their profits.

Many farm-state Senators and Congressmen muttered, perhaps unfairly, that Carter's policy was chiefly intended to benefit Atlanta-based Coca-Cola, which is the nation's biggest commercial sugar user, accounting for about 10% of annual U.S. consumption, and is headed by his longtime friend J. Paul Austin. At a Senate hearing, Louisiana Democrat Russell Long told Bergland, "I would call the existing sugar program a Coca-Cola program." Replied White House Aide Lynn Daft: "The Coca-Cola charge is an outrage." Still, in a July 7 memo to Carter, White House Assistant Stuart Eizenstat recommended that the President indicate his "willingness" to raise tariffs, at least to cool off Congress. Carter's reply: "Not yet --but keep me informed."

Then on July 28, the House overwhelmingly approved an amendment to the 1977 farm bill ordering the Administration to impose tariffs on foreign sugar and establish a loan or purchase program that would support prices at 55% of parity or 14.3-c- per lb.

The next day Bergland warned Agricultural Committee Chairmen Thomas Foley in the House and Herman Talmadge in the Senate that the President would veto the farm bill if a joint conference committee did not drop the amendment. Three days before Bergland passed along the veto threat, the leading sugar-user spokesman, Coca-Cola's chief purchaser, John Mount, remarked to a group of colleagues while they were having drinks at the bar of Washington's Sheraton-Carlton Hotel: "If we cannot prevail in conference, we will just have to call in a few chits and have the President veto the farm bill." Mount told TIME Correspondent Greg Wierzynski last week that the comment--which he does not remember making--was nothing more than an idle boast. Said he: "I apparently violated an old rule, never to discuss business at the bar."

Whatever Mount's role, Bergland and Long worked out a compromise.

The price-support level was established at 13.5-c- per lb., and Bergland pledged to begin setting up the support program before the bill became law on Oct.

1. But Bergland was unable to persuade Carter to back the plan. Said Bergland:

"The President and his advisers were more comfortable with the payments scheme."

Sensing a doublecross, Republican Senator Robert Dole of Kansas angrily accused Bergland of being in "open conflict with what the Congress has directed him to do." Finally, in early November the Administration imposed the tariff and established the support program. For no apparent reason, however, the regulations omitted refined sugar from the tariffs and were otherwise ineffective in curtailing the import of raw sugar before the Jan. 1 deadline. While the Administration delayed closing the loopholes for ten weeks, foreign sugar flooded the U.S. In December alone, nearly 2 million tons of sugar was imported, about six times the normal amount. With warehouses still bulging with surplus sugar, prices are expected to be depressed for months, a fact that may make housewives smile but is of no solace to the still beset U.S. sugar grower.

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