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Published January 24 2012

VIDEO INSIDE: Debate hits sour note for sugar producers

FARGO – A day after the two leading contenders for the Republican presidential nomination suggested they want to end a program that benefits domestic sugar producers, supporters of the federal policy defended it as a helpful safety net for one of the Red River Valley’s most important industries.

The remarks came Monday night during a primary debate in Florida – a key cane sugar state. Presidential hopeful Newt Gingrich called the sugar program “an amazing side story in how interest groups operate.” In an ideal world, he said, growers would operate without market support. He also said the program would be difficult or impossible to kill.

Fellow GOP contender Mitt Romney, meanwhile, said: “We ought to get rid of subsidies and let markets work properly.”

Supporters of the sugar program argue it’s not a subsidy in the traditional sense. Sugar farmers don’t get government payments to boost, suppress or otherwise control production.

Instead, they get price protection in the form of quotas that limit competition from imports. A group of 41 countries have quotas that consist of 15 percent of the U.S. sugar market. Nearly all of the rest goes to domestic producers.

“It’s a no-cost program,” said Nick Sinner, executive director of the Red River Valley Sugarbeet Growers Association, which represents owners of American Crystal Sugar Co.

Crystal has spent about $1.1 million on lobbying and political contributions during the current election cycle, and nearly $8 million over the past decade.

Kevin Price, the company’s director of legislative affairs, said Tuesday the company has nothing to hide. He said the lobbying efforts help educate policymakers, and the company has nothing to hide.

Sinner said the program supports an industry with a $3.1 billion impact and 2,700 employees in Minnesota, North Dakota and eastern Montana.

Critics – a mix of free-market adherents and food and candy companies that buy sugar in bulk – say the market protections inflate sugar prices.

An October report from Agralytica, a food and agribusiness consulting firm, said the program costs American consumers $4 billion annually. (At the time the report was issued, the firm was known as Promar International.)

But it is fiercely defended – on both sides of the political aisle – by the region’s federal lawmakers.

Rep. Collin Peterson, the ranking Democrat on the House agriculture committee, said the program safeguards growers against catastrophe.

“The government isn’t guaranteeing anybody a profit. They’re just guaranteeing the industry can exist when the market collapses through no fault of their own,” said Peterson, who represents the Congressional district that includes Moorhead.

Peterson said agriculture programs are common political targets as the country becomes more urbanized. The sugar program hasn’t faced a serious challenge in Congress in recent years, but Peterson said it also hasn’t faced a test vote with the current membership. The current federal farm bill expires at the end of this year.

He said the program balances out similar supports for foreign competitors. Get rid of the program, he said, and those competitors could control the market.

“Would the ideal situation be that we didn’t have to have a program? I guess that would be the case, but that’s not the real world,” Peterson said.

Rep. Rick Berg, R-N.D., and Sen. Amy Klobuchar, D-Minn., also voiced their support for the program, as did Sen. Al Franken, D-Minn., and Sen. Kent Conrad, D-N.D.

Conrad said he believes the import protections are in good shape, but the exchange during the debate just “makes it all harder.”

Berg said via a spokeswoman that it helps create jobs and keeps North Dakota farmers competitive.

Klobuchar, a member of the Senate agriculture committee along with Sen. John Hoeven, R-N.D., said if Gingrich or Romney want to nix the program, “they’d better come up and meet with the 30,000 people that have work related to sugar beets in the Red River Valley.”

WDAY-TV and the Grand Forks Herald contributed to this report.

Readers can reach Forum reporter Marino Eccher at (701) 241-5502

Watch this portion of the debate

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