Flood Insurance and Modernization Act

Floor Speech

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Mrs. SHAHEEN. Mr. President, I thank Senator Stabenow, who has done such a great job of chairing the Agriculture Committee. She and Ranking Member Roberts really have done amazing work to bring this bill to the floor. It is bipartisan, and it is legislation that makes some significant reforms in the farm programs we have had.

In New Hampshire, many of the programs that are authorized in the farm bill are critical for our farmers and our rural communities, as well as for the protection of our natural resources. I hope we do have some agreement so that we will be able to actually have a full debate on this bill in the remainder of this week and in the upcoming week.

As I said, this legislation makes much needed reforms to our farm programs, and it helps to reduce the deficit. For all of that terrific reform and the work that has been done, Senator Stabenow and Ranking Member Roberts deserve real appreciation and thanks from this body.

However, there is one glaring exception to the reforms that have been made in the bill; that is, the bill contains no reform to the Sugar Program. The sugar subsidies we provide to farmers in America are really unique because what the Federal Government does is to artificially restrict supply and provide a subsidy that keeps prices for sugar in the United States at nearly twice the world average. These are high prices that hurt consumers. They hurt businesses. In fact, a recent study found that the program costs Americans $3.5 billion a year.

Let me explain how the subsidy works. First, the Federal Government sets a floor on sugar prices through guarantees. So they guarantee how much is going to be paid for the price of sugar. These price floors ensure that sugar growers and processors will always receive a minimum price for sugar regardless of what happens on the world market. But sugar prices have been far higher than the minimum price for years now, and that is thanks to some additional, very egregious government controls on sugar. Under the sugar subsidy program, the Federal Government tells sugar growers how much they can grow. These restrictions are called marketing allotments, and they limit how much sugar is available on the market and restrict the ability of buyers and sellers to trade sugar freely. So this is not a market enterprise when it comes to sugar in the United States, and no other U.S. crop is subject to these same kinds of government controls. As a result, in the United States we have severe supply shortages which keep sugar prices artificially high.

The last component of the subsidy program for sugar is trade restrictions. The Federal Government severely restricts the amount of sugar companies can import into the United States. So only about 15 percent of sugar in the United States is imported at those lower world average prices.

Again, no other crop is subject to the kinds of restrictions and price controls I have just described. The result is a
subsidy that hurts hundreds of thousands of businesses and consumers and only benefits about 4,700 sugar growers. Unfortunately, the farm bill before the Senate, while it contains a lot of reforms, contains no reforms to this subsidy program.
I have introduced several amendments, but the one we are going to be voting on tomorrow is one that would repeal the subsidy so that prices are determined by the market instead of government controls.

For the past 1 1/2 years, I have been working with our colleague, Senator Mark Kirk of Illinois, on bipartisan legislation--the SUGAR Act--which would phase out the Sugar Program over several years and eliminate government control of sugar prices. Unfortunately, Senator Kirk can't be here tomorrow for this vote because he is continuing his recovery, but I am pleased there is a bipartisan group of our colleagues who have joined in support of this sugar reform. In particular, Senators LUGAR, MCCAIN, DURBIN, TOOMEY, LAUTENBERG, COATS, PORTMAN, FEINSTEIN, and my colleague from New Hampshire, Senator Ayotte, have all joined me in calling for elimination or significant reform of the Sugar Program.

This is a big concern for us in New Hampshire and other States around the country that actually make candy or other products that rely on sugar. In New Hampshire, we are the American home of Lindt chocolates. We also have a number of other small candy companies. As this chart shows, American manufacturing companies such as Lindt pay almost twice the world average price for their sugar. In fact, prices have gone up considerably since Congress passed the last farm bill in 2008.

We can see that this blue line at the bottom is the world price of raw sugar. This red line is the U.S. price of raw sugar. This green line at the top is the U.S. wholesale refined sugar price. So while we can see how much higher that raw sugar price is, we can also see what it does to the refined sugar price, and we can see how significantly it has increased since the last farm bill. Again, the sugar subsidy program is able to keep these prices so high because it distorts the market.

In addition to the minimum prices guaranteed by the government, the Federal Government drastically restricts the supply of sugar in the United States, with only about 15 percent of sugar sold coming from abroad--thanks to those import restrictions. The government controls how much each individual sugar processor can sell, and that further restricts supply on the market. Again, the result of these government controls is to keep the artificially high prices for sugar that are reflected on this graph.

These high sugar prices hurt job creation. According to the Department of Commerce, for every one job protected in the sugar industry through this program, we are sacrificing three jobs in American manufacturing. A recent study by an agricultural research firm called Promar suggests that the program--the sugar subsidy, that is--costs 20,000 American jobs each year. In addition, a recent analysis that I referred to earlier found that the program also costs consumers $3.5 billion every year in the form of artificially high sugar prices. These really are pretty startling numbers, but I wish to talk about how this subsidy program affects just one of the small businesses in New Hampshire.

We have a company called Granite State Candy Shoppe. It is a small family-owned candy manufacturing company in Concord, NH, the capital of New Hampshire. Sugar is that company's most important ingredient. Jeff Bart, who is the owner, tells me that the artificially high cost of sugar has forced the company to raise prices on their goods but, more importantly, the subsidy has also prevented the company from hiring new workers as quickly as it would like to. So while

Granite State Candy Shoppe would like to grow and expand, the sugar subsidy is really slowing down that expansion because of the high price of sugar. Granite State Candy Shoppe is just one of many companies that want to grow but are forced to slow down their expansion due to an outdated, unnecessary government program that benefits relatively few sugar cane and sugar beet growers nationwide.

High sugar prices also put American companies at a competitive disadvantage with foreign manufacturers. Since foreign companies can get sugar so much cheaper, it is tempting for American companies to look elsewhere to manufacture their candy. In fact, low sugar prices are a major selling point for foreign governments encouraging candy companies to relocate.

We just copied this cover of a brochure from Canada. It says:

Canada--North America's Location of Choice for Confectionary Manufacturers.

Consider these hard facts. Sugar refiners import the vast majority of their raw materials at world prices. Canadian sugar users enjoy a significant advantage--the average price of refined sugar is usually 30 to 40 percent lower in Canada than in the United States. Most manufactured products containing sugar are freely traded in the NAFTA region. So we are losing these jobs to Canada and to other places--20,000 jobs a year--in businesses that need sugar as a major ingredient.

This outdated program puts American companies at a competitive disadvantage, and it should go. That is why I hope our colleagues, as they are considering this amendment tomorrow morning to repeal the Sugar Program, will decide to support it. I hope we will not have opposition to voting on the amendment from any of our colleagues in the Senate.

We have had consumer and business groups calling for the repeal of the Sugar Program for years now. The Consumer Federation of America and the National Consumers League have joined business groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers in support of this amendment. These groups support reforming this program because they recognize that these special interests are hurting consumers and they are hurting American businesses.

So I hope all of my colleagues will support this amendment tomorrow. Help us grow small businesses and create those American jobs. Let's reform the Sugar Program. It is long overdue.

Mr. President, I yield the floor, and I suggest the absence of a quorum.

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