Updated 2 yearss ago
After sticking taxpayers with a $100-million tab, growers are bracing for changes in federal farm policy.
By David Villano
The vast fields of sugar cane south of Lake Okeechobee -- more than 425,000 acres in all -- are a testament to both the region's rich, fertile lands and, perhaps even more, to the generosity of federal lawmakers. Sugar remains one of farming's most highly subsidized commodities.
That fact was never more apparent than late last summer, when the industry's three major producers -- U.S. Sugar, Florida Crystals and the Florida Sugar Cane Growers Cooperative -- forfeited more than $100 million in raw sugar to the federal government rather than pay back their crop loans. U.S. taxpayers now are left holding a 270,000-ton bowl of unwanted sugar. Add similar forfeitures by Western-state sugar beet growers, and the federal inventory of sugar, as of early October, topped 800,000 tons, about 12% of total sugar production last year.
To sugar producers, the forfeiture decision was a no-brainer. Industry officials say it costs them about 19.5 cents to produce and ship a pound of sugar. But last summer, the spot futures price of domestic sugar dropped below 17 cents, its lowest in nearly a quarter-century. As a result, it made more sense to pay off their collateralized loans using raw sugar, which the U.S. Commodity Credit Corp. -- the federal government's agricultural lending agency -- values at 18 cents a pound.
Sugar prices are low because there's too much of it. An unusually good growing season, coupled with increased imports, poured excess sugar into the market. Meanwhile, farmers continue to be attracted to both sugar cane and sugar beets because of their price supports. The price of domestic sugar is propped up to about twice the price on the world market. As a result, Western sugar beet production has increased for the past four years in a row.
But critics of federal sugar policy are pointing to the recent forfeitures as evidence of a broken system. "The problem with our sugar program is that it encourages overproduction," says U.S. Rep. Dan Miller, a Republican from Bradenton. "The government is encouraging farmers to grow sugar whether the market can absorb it or not."
When the current federal farm program is up for renewal in 2002, Miller and a growing number of other free-market advocates will propose eliminating the price supports and other subsidies long enjoyed by sugar growers. The changes won't come easy. The industry's lobbyists are legendary for cajoling lawmakers. Indeed, U.S. Sugar Executive Vice President Jim Terrill won't even entertain the possibility of Congress changing the policy. "That's really a hypothetical situation," he says, "but I will say the likelihood of (moving to) a free market is not very high."
With or without subsidies, the price of sugar is not expected to rise much above 20 cents a pound anytime soon. That could be troubling with a long-term crop such as sugar, which remains in the ground up to five years.
Some growers are preparing for tough times. Last September, U.S. Sugar eliminated 318 jobs, or about 9% of its workforce. It also reorganized into two divisions -- sugar and citrus.
"There will always be a place in Florida for sugar," says Miller. "It just needs to learn to compete freely and openly like other industries are doing."
In the News
Boca Raton -- To reflect its reorientation from a computer peripherals maker to an engineering and design services provider for the interactive TV industry, Boca Research has changed its name to Inprimis. The company also announced that board member Eduard Will has been appointed CEO. The company now trades on Nasdaq under the symbol INPM.
Coral Gables -- Physicians Healthcare Plans, one of only a few profitable managed-care firms in the state, has been named by the Agency for Health Care Administration as Florida's top Medicare HMO. The ranking is based on member satisfaction. The company is the largest Hispanic-owned and operated managed-care firm in the nation.
Dania Beach -- Controversial businessman Gus Boulis has sold his stake in SunCruz Casinos to a group of Washington, D.C.-area investors. SunCruz, which operates 11 gambling boats in nine Florida cities, has been under fire from citizens groups and the Florida Attorney General's Office for allegedly violating local zoning laws that prohibit the ships from docking at commercial landings. The new owners plan to add bigger ships and more trips. The company, which employs about 1,200, will remain based in Dania Beach.
Fort Lauderdale -- Holiday RV Superstores (Nasdaq-RVEE), a chain of 14 recreational-vehicle dealerships, has moved its headquarters here from Orlando. The company, which employs about 400 nationally, will have an initial headquarters staff of nine. The figure is expected to double within a year as the company continues an aggressive acquisition spree aimed at bringing its total number of dealerships to 60.
Miami -- Miami-Dade is home to the nation's first public housing assisted living facility: the 104-unit Helen Sawyer Plaza on NW 11 Street in Miami. Applicants must be at least 65 (or disabled) and be eligible for Medicaid. The facility was financed by Miami-Dade County, the state of Florida and the Department of Housing and Urban Development.
Miami-Dade -- Fine Air, Miami International Airport's largest cargo airline with 125 flights a week, mostly to Latin America and the Caribbean, has filed for Chapter 11 bankruptcy protection. Officials blame high fuel costs and economic uncertainty in Latin America. No layoffs are expected, and no flights will be interrupted during the reorganization. Fine Air employs about 900, mostly in Miami-Dade.
Citing low crime, a low cost of living and a high quality of life, a top Latin American business magazine has named Miami the best city for Latin American companies to conduct business. Miami beat out S?o Paulo, Brazil, and Santiago, Chile, for the top spot in the rankings compiled by AméricaEconom?ca magazine.
The Beacon Council, Miami-Dade's economic development agency, helped create 7,412 jobs in the 12-month period ended in September, translating into $231 million in new investment, according to the council. Among companies it helped attract: Porsche Latin America, Gap and Volkswagen Group Latin America. The Beacon Council also announced that BankAtlantic's Miami-Dade chairman, Mario del Valle, will be the council's next chairman.
Sunrise -- Sawgrass Mills, one of the most visited tourist spots in the state, has submitted plans for a 550,000-sq.-ft. expansion. The space will allow the mall to attract at least two more anchor tenants. The 2.7-million-sq.-ft. Sawgrass Mills, which opened in 1990, attracted 25-million shoppers in 1999, including 10 million from outside the U.S.
Retail CityPlace Up and Running
WEST PALM BEACH -- Following its grand opening in October, downtown West Palm Beach's CityPlace becomes the latest entrant into the growing field of entertainment-oriented retail malls. Big-name tenants include Macy's, Barnes & Noble and Hugo Boss. The 55-acre, $550-million project also includes various restaurants and a 20-screen theater. Plans also call for a cultural center, condominiums and office space. Developers hope its proximity to the city's performing arts complex and the Clematis Street entertainment district will help CityPlace emerge as a center for urban nightlife.