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Extensions of Remarks Hon.Thomasj.Downey

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Extensions of Remarks Hon.Thomasj.Downey 22594 EXTENSIONS OF REMARKS September 30, 1981 EXTENSIONS OF REMARKS SUGAR LOAN PROGRAM protection from various international hob­ that it lasted for a grand total of 5 weeks, goblins that are said to lurk in the world and that is the honest to goodness fact. sugar market. In the entire last decade the world price HON.THOMASJ.DOWNEY Of course, the most ferocious of these of sugar exceeded 60 cents a pound for the OF NEW YORK hobgoblins is an OPEC sugar cartel, some­ grand total of 35 days. As a matter of fact, IN THE HOUSE OF REPRESENTATIVES thing which we are told will spring up during the entire last decade the price of sphinx-like if the U.S. production base world sugar exceeded 30 cents a pound for Wednesday, September 30, 1981 erodes even marginally. only 7 months. e Mr. DOWNEY. Mr. Speaker, in the The problem is that cartels can fix artifi­ The point I am trying to make here very next few days we will be considering cially high prices if, and only if, they can simply is yes, you had a very short period of the farm bill, and with it the question drastically curtail production or control pro­ instability in the market when the futures of whether or not to approve a billion duction. The odds of that happening in the price was bid up, when Congress refused to world sugar market are about of the same extend the old program, but the underlying dollar sugar loan program. I think it order as of eradicating ragweed. fundamentals of the industry and the world would be of great help to my col­ Sugar is grown in 83 countries. It is ex­ market are such that there is endemic leagues in anticipating this question to ported by 47. It is produced in regions from excess production capacity or potential for consider the wisdom of our former col­ Norway to Australia. It can be grown in sugar production in the world and that is league, Budget Director David Stock­ practically every climate, topography and going to hold the sugar price in the future man, when he sat with us in this body soil imaginable, and more importantly, since much closer to the 12 or 15 cents per pound 2 years ago during a similar consider­ we are referencing the argument to OPEC, level that it is at today than the 16 to 20 ation of the farm bill. The enlight­ unlike the case of oil, in which it took cents provided for in this bill, and most cer­ mother nature 100 million years to lay down tainly than the harrow stories of 60 cents or ened, free-market sentiments ex­ 60 percent of the world's reserves in a $1 per pound sugar that is being warned pressed so well by our distinguished narrow strip of sand around the Persian about by its backers. colleague on that occasion can, I Gulf, sugar production can be increased dra­ I want to talk about the third consumer think, serve as a beacon to us all in the matically in a matter of 1, 2, or 3 years in benefit that we are supposed to get from coming debate. dozens of regions around the world. this bill; namely, protection of our economy With that view in mind, Mr. Speak­ In response to these high prices that we and our consumers from the stupidity of er, I would like to insert the full text have heard about in 1974 and 1975, for in­ foreign producers who insist on dumping of Mr. Stockman's landmark speech stance, U.S. acreage of sugar acreage alone sugar on our market below the cost of pro­ expanded 27 percent within the course of duction. Since dumping is a form of income on sugar price supports in the RECORD less than two growing seasons. transfer of what we call foreign aid, I am for the illumination of my colleagues. In short, the point is a sugar cartel cannot wondering just who the countries are, what Mr. Stockman's speech follows: be created because there are too many pro­ foreign principalities really engage in this Mr. STOCKMAN. Mr. Chairman, I move to ducers to begin with an artificially high over a sustained period of time. The fact is strike the last word. prices cannot be sustained for any reasona­ there has not been any evidence presented Mr. Chairman, if some of the Members of ble period of time because the production to show that. the House are confused on this amendment, response is too elastic. We keep hearing about how the price in let me suggest a simple formula to resolve The second benefit we are supposed to France or Denmark or Japan is 40 or 50 their doubt. get, the consumer, the American economy is cents a pound but those are net importers, Flip a coin on the Frenzel amendment and supposed to get for this very high insurance not exporters. The reason the price is so then vote "no" on final passage, regardless premium we are being asked to pay, is pro­ high internally is they support their domes­ of the outcome; because the fact is this tection from an unstable market and, as we tic industry at that very high level. If we amendment involves nothing more than an heard a moment ago, from the threat that want to talk about dumping we have to look intramural debate about which pocket to without a sugar program prices might sky­ at the net exporters, the Philippines, Brazil, fleece, the tax pocket via direct payments; rocket through the ceiling and reach 60 Mexico, South Africa. Their internal prices and the gentleman from Minnesota <Mr. cents a pound again or even $1 a pound. are the same as the world price. They sell FRENZEL) is against that, and I commend I think the point here is very simple. both on the spot market and long-term con­ him for it; or the consumer expense pocket Beware of price fixers bearing gifts of tract market. The long-term contracts, for via higher price supports and tariff levels. Market stability and consumer protection. the most part, except for the convention, I would suggest to the House that the im­ As a matter of fact, I would suggest we are tied to the future price and spot market portant matter here is that in the final amend that old story about the three great­ price of sugar. The fact is there is a work­ analysis it really does not matter which est lies to include: First, "My check is in the able world sugar market out there that is pocket you fleece, because either way, the mail"; second, "This will only hurt a not subject to the influence of all these hob­ American economy and the consumer tax­ second"; and third, "My plan will protect goblins we hear about. payers will end up paying up to $4 billion you from high prices." What we have before us is a proposal that extra for sugar over the next 4 or 5 years The fact is all price fixing, all market rig­ merely is aimed at a few thousand marginal and for absolutely no good reason. ging schemes are designed to stabilize the producers, a very small slice of American ag­ Now, the simple, unvarnished purpose of price, of course. Even Mr. Yamani says he is riculture, that do not want to have to adjust this bill is to prevent low-cost foreign im­ ravaging our economy today to spare us or move acreage into some other productive ported sugar from gaining a larger share of from an even worse fate tomorrow. endeavor. the U.S. market and thereby assure that But these price fixing, stabilizing schemes I would just remind the committee in the every last acre, every plow, every harvesting are not designed to minimize costs to con­ last 4 years, and this is an astounding machine and every processing plant now de­ sumers. They are not designed to maximize figure, but in the last 4 years we have seen voted to domestic sugar production remains production efficiency. an expansion of the production of sunflow­ profitable and competitive under the artifi­ The CHAIRMAN. The time of the gentle­ ers from 400,000 acres to 4 million acres cial protection of a high-tariff umbrella. man from Michigan has expired. which came out of something that was Thus, the fundamental issue that this legis­ <By unanimous consent Mr. STOCKMAN was being produced there before that was not as lation poses to the House is very simple. allowed to proceed for 4 additional min­ profitable. That expansion in 4 years is What does the American economy, or utes.) twice all of the acreage we have in sugar in what do the great bulk of American con­ Mr. STOCKMAN. No, they are designed to the entire country. sumers get from this billion-dollar insurance protect market shares, profits, and lessen So what the choice here today really is program designed to prop up the domestic competitive discipline in the industry in­ not between pro-producer or anti-consumer, sugar industry? volved. the choice really is find a progressive eco­ The answer, the only one that I can detect Let me refer to this 60-cent price we had nomic policy that recognizes that our re­ as I read the propaganda for this bill, is that in 1975 and we have been warned will sources are our acreage, our capital, our in the spirit of the Halloween season upon happen again if we do not have a sugar pro­ labor has to shift as market conditions us, the American consumer will get some gram.
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