Bakers see U.S. Sugar Program as unfair, sugar-beet farmers see it as sustaining

Congressman Paul Tonko

Enterprise file photo — Michael Koff

Congressman Paul Tonko

ALTAMONT — A letter to the editor that has appeared in newspapers across the country accusing local congressmen and women of being in the pocket of the nation’s beet and cane sugar cartels, landed in the inbox of the Enterprise editor last week.

The letter, written by Nicholas A. Pyle, president of the Independent Bakers Association, says that Congressman Paul Tonko has received well over $30,000 in political donations from the sugar cartels, and is therefore in its pocket, since arriving in Washington in 2009.

Tonko has raised a little over $5.2 million since 2009; the donations from the so-called sugar cartels account for .007 percent of the money he’s raised since entering Congress.

The letter states, “Tonko continually votes to maintain the U.S. Sugar Program,” which Pyle characterizes as a “Soviet-style command-and-control scheme that restricts planting and imports,” and claims, “This inflates the price of sugar in the United States to almost double the world price.”

“They are targeting Democrats with those letters to the editor,” says Luther Markwart, executive vice president of American Sugarbeet Growers Association, a group that lobbies on behalf of the sugar-beet growers.

Markwart says all of Pyle’s and the IBA’s campaign contributions go to the GOP.

Since 1990, the Independent Bakers Association has made $345,268 in campaign contributions; $338,068 has gone to Political Action Committees and $4,200 has gone to individuals; 92 percent of contributions went to PACs or individuals aligned with the Republican Party, according to opensecrets.org, a website run by the Center for Responsive Politics, a nonpartisan, not-for-profit research group.

According to opensecrets.org, the sugar-cane and sugar-beet industry contributed nearly $8 million to candidates in 2016 — an all-time high. Also in 2016, the industry hit a new record in lobbying expenditures — over $11 million.

So far, this year, American Crystal Sugar has been the largest, single contributor in the agribusiness-sector. It is also the same contributor that gave Tonko the bulk of his donations associated with the sugar industry.

“He’s [Tonko] accepted money from the sugar lobby, and he has voted against attempts to reform the [U.S. Sugar] Program to make it more market-oriented,” Nicholas A. Pyle told The Enterprise.  

Matt Sonneborn, communications director for Tonko, says, “The congressman’s votes in the past have been based on his prioritization of American farmers. This is drawing on his values, supporting local agriculture, supporting the New York economy — it has nothing to do with political donations. Paul Tonko has never in his life, taken a vote based on a political donation — it’s not who he is, it’s not how he does his work.”

 

The Enterprise — H. Rose Schneider
Sugar to go: Mike Cavalieri purchases a sweet treat at the Dunkin’ Donuts on the corner of Western Avenue and Route 155 in Guilderland. In 2015, the average American consumed 69.1 pounds of refined cane or beet sugar.

 

Sonneborn says it’s more likely that someone has a spreadsheet and is copying and pasting a name and a piece of data. “This is a national effort; this isn’t someone interested exclusively in New York issues,” he says.

Pyle says, “We’re working on a project right now, it’s basically a ‘shame on you congressman,’” letter writing campaign.

The Enterprise found 14 letters to the editor sent to the local newspapers of members of Congress, where only the name of the member and how much they received in donations from the sugar lobby had been changed.

Sonneborn says Tonko doesn’t blanketly support the U.S. Sugar Program.

“When he [Tonko] is looking at policy for sugar, the factor that he is drawing on is his prioritization of American farming,” he said.  

“He [Tonko] is committed to the farmers who have been supported by the programs that he has voted to support,” Sonneborn said.

U.S. Sugar Program

Pyle says the U.S. Sugar Program has protected sugar interests since the Spanish-American War, and he says sugar costs the American public double what the rest of the world pays.  

In 2015, the average American consumed 69.1 pounds of refined cane or beet sugar.

Markwart says that sugar grown outside of the U.S. is heavily subsidized by the local governments of those countries; and, combined with cheap labor, makes it difficult for the U.S. to compete.  

U.S. sugar policy dates back to the birth of the United States. An import tariff was introduced in 1789 as a way to generate revenue for the young government, and existed for the next 100 years, until it was removed in 1889. Very quickly, cheap imports of sugar undercut domestic processors, which would demand a subsidy. This led to the re-imposition of a tariff in 1890.

The Great Depression caused a re-evaluation of sugar policy; the price of imported sugar had become so cheap that the tariff didn’t matter. So, a quota system was instituted that capped the amount of foreign sugar that could come into the country.

By the early ’70s, the worldwide price of sugar appeared to be high and stable, so government supports were allowed to lapse. By 1977, the government stepped back in with mandatory-price supports.

Pyle told The Enterprise that the United States restricts imports of sugar, and restricts who can grow what, and where.

Markwart maintains those restrictions are necessary, because, without them, cheap, international sugar that is subsidized by foreign governments would boot U.S. sugar growers out of business.

The Agriculture and Food Act of 1981 set the stage for today’s present policies that “provide a price guarantee to the processors of sugar cane and sugar beets, and by extension, to the producers of both crops,” according the the Congressional Research Service, an agency with the Library of Congress that does nonpartisan research for Congress.

The policies are:

— Price support in the form of non-recourse loans, which, according to the United States Department of Agriculture, “allows sugar processors to obtain loans from USDA … And upon loan maturity, the sugar processor may repay the loan in full or forfeit the collateral (sugar) to USDA if prices are too low”;

— Marketing allotments, which limit the amount of domestically-produced sugar that can be sold each year;

— Import quotas, which control the amount of sugar coming to market; and

— A sugar-to-ethanol backstop, instituted in 2008, which allows the Commodity Credit Corporation (a government-owned corporation) to buy up surplus sugar from the market earlier than what used to be allowed to avoid forfeitures of sugar-loan collateral. The CCC will then sell only to bioenergy producers, keeping the sugar away from its normal market.

There are no direct subsidies to sugar farmers.

The sugar program was structured to operate at no cost to the federal government; the cost is borne by the consumer, according to the Congressional Research Service.

This objective of operating at no cost to the government has been mostly met except for the 2012-2013 crop year when sugar forfeitures caused  the government to spend $259 million. Markwart says this happened because Mexico dumped tons of cheap sugar onto the U.S. market.  

In 2014, the USDA reported to the World Trade Organization $1.4 billion in import-price protection for U.S. sugar.

Pyle says these policies are why the U.S. pays 30 cents per pound for sugar, while the rest of world is paying 15 cents a pound.  

Markwart says, “This is not a fair comparison.” He says opponents to the sugar program use different sugar prices to confuse people; they compare U.S. wholesale prices to the prices foreign countries use to dump their sugar on the open market.

Foreign suppliers, in their own domestic markets, have much higher prices for retail sugar, Markwart says. The suppliers will take the excess sugar from their own markets and dump it on the world market because, if the sugar were kept in the domestic markets, the price would collapse, he says.  

The fairer comparison is domestic market versus domestic market, Markwart says; that is where the U.S. has better prices than other markets.

Markwart cites a 2015 study from SIS International Research, a market-research firm, that says a pound of retail sugar costs: 54 cents in the U.S; 63 cents in Canada; 70 cents in England; and 82 cents in Germany.

According to the USDA, as of September, the world-wide price for a pound of refined sugar (the price food manufacturers and grocery stores pay) is 16.82 cents per pound, and in the U.S. the price is 32.90 cents per pound. Retail sugar in the U.S. costs 65.80 per pound.

For the average household, that’s an additional $58 per year, according to Pyle’s letter to the editor, which cites the Congressional Budget Office.

“That’s why we have candy bars and baked goods made in Mexico now. Most of the hard-candy jobs have left Chicago … and gone to Canada,” Pyle said.  

“The makers of Life Savers, Dums Dums and Jelly Belly beans have all opened factories overseas, citing the high cost of American sugar. It was implicated in the closure of a Chicago Nabisco plant last summer, which resulted in the layoff of 600 people,” according to a report from The Washington Post.

The national average return on crops per acre is $475. Sugar’s return is $1,291 — the highest per-acre valuation, according to the Congressional Research Service.

Money, lobbyists, and votes

The letter to the editor can be traced back to a vote on a non-binding motion associated with sugar imports cast by Tonko in 2013.

The “farm bill,” as it is colloquially known, addresses the United States’ agricultural and food policy about once every five years. In 2014, the farm bill — or Agricultural Act of 2014 — cost nearly a trillion dollars.

In October 2013, during the debate over the farm bill, Tonko voted against House Resolution 378, which would have allowed the Secretary of Agriculture the authority to increase sugar imports year-round, instead of during the six-month window that was already allowed by law.

House Resolution 378 was introduced by “members who supported the
position of food manufacturers that use sugar. Their intent was to have House conferees advocate for a return to the discretionary authority that the Secretary of Agriculture previously exercised to manage supplies of sugar throughout the marketing year to meet domestic demand at reasonable prices,” according to the Congressional Research Service.

The bakery, cereal, and related-products industry used close to 2 billion pounds of sugar in fiscal year 2015, according to the USDA.

The Independent Bakers Association’s “members are responsible for roughly half of U.S. production of baked products,” according to a 2002 letter to Food and Drug Administration, written by Robert N. Pyle, then president of the IBA, and Nicholas A. Pyle’s father.

Nicholas A. Pyle is the only full-time employee listed on the Independent Bakers Association’s most recent tax return; and, according to the filing, he does not draw a salary from the IBA.

The IBA paid $79,500 in management fees to Pyle and AssociatesPyle is a lobbyist, who has also lobbied for Eramet Marietta Inc., a metallurgical manufacturing company; McKee Foods, manufacturer of Little Debbie’s and Drake’s cakes; and Welch’s, known for its grape juice. Nicholas A. Pyle has been involved with the IBA since 1976, and on a full-time basis since 1985, he says.

New York State doesn’t grow sugar cane or sugar beets commercially.

According to the American Sugar Alliance, the lobbying arm of the sugar industry, in New York State, 1,105 jobs are supported by the sugar industry; with a major cane-sugar refinery in Yonkers employing the bulk of workers.

Pyle told The Enterprise that sugar interests represent 4 percent of all the agricultural commodities in the United States, but give about 40 percent of the political donations associated with agriculture.

He says the sugar companies give so much money because they want to keep their program intact.

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