Sugar growers may share ethanol action

Congress is hoping that an ethanol industry with an endless appetite for corn will have a sweet tooth too.

Under the farm bill the House passed last month, the federal government would buy surplus sugar and sell it to ethanol producers, where it would be used in a mixture with corn. The program was inserted as a hedge against a looming North American Free Trade Agreement provision, which will let Mexico export unlimited amounts of sugar to the U.S. starting next year.
The U.S. sugar program currently props up sugar prices through a combination of price guarantees and import quotas. Once the limit on Mexican imports expires, the government could be faced with a price-depressing glut of sugar, which in turn could lead to taxpayer-funded government purchases of surplus sugar.

With that backdrop, the Congressional Budget Office has estimated the sugar program would cost about $1.3 billion over 10 years. The program currently doesn’t cost taxpayers anything because sugar prices are higher than the guaranteed minimum price.

The chairman of the House Agriculture Committee, Minnesota Democrat Collin Peterson, inserted the sugar-to-ethanol provision in the farm bill. Minnesota is the nation’s largest producer of sugar beets, and Peterson represents the state’s sugar beet-growing Red River Valley. U.S. sugar is made from beets in some Northern and Western states, and cane in a few Southern states and Hawaii.

Kansas City Star