Sugar’s Storage Loans Benefit Farmers, Consumers, Taxpayers Alike

Fall marks the start of the busy harvest season for sugarcane and sugarbeets across the country. In Florida, farmers hope for the best as they cut wind-blown cane from fields hit hard by Irma.In southern Louisiana, the dry weather in recent weeks has made harvesting in the often-muddy soil a little easier.  But, farmers there know that the hurricane season lasts through November and the threat of frost intensifies in December.Here in Idaho, as well as Minnesota, Michigan and eight other states, farmer-owned sugar processing facilities will soon start running 24 hours a day as we dig beets from the ground, racing against the season’s first freeze. Food companies and retailers have chosen not to construct huge on-site warehouses to store ingredients or pay for a year’s worth of inventory in advance of delivery. Instead, they benefit from “just-in-time delivery,” where sugar producers store, handle and transport the ingredient exactly when it is needed.  And the customer typically pays for the sugar 30 days after it is delivered.While this strategy reduces food company and retailer costs, it pushes those costs onto producers. That’s where the non-recourse loans found in the Farm Bill come into play. These loans are designed to help producers pay bills associated with the crop while they are marketing it throughout the year.  Then, when crops are sold, the loans are repaid with interest.These loans are at the heart of U.S. sugar policy, and repayment with interest is why sugar policy operates at no cost to taxpayers.