Louisiana's sugar cane production is booming.
Despite a severe drought, the state's 2023 harvest produced more than 1.8 million tons of sugar. The number of acres of sugar cane harvested has been increasing over the past few years, as has the tons of sugar per acre, due to more sugar-intense varieties.
It's not just Louisiana. While the Food and Agriculture Organization predicts a global 2% decline in sugar production from 2022-23, due to drier-than-normal conditions, the U.S. is setting records. The USDA is predicting a total domestic sugar production of 9.39 million tons for the 2023-24 year, a record high. Almost 4 million tons of that is sugar cane, while the rest is sugar beets.
But producers say costs are rising too, and a new farm bill with a stronger safety net is needed.
At the American Sugar Cane League annual meeting Tuesday in Baton Rouge, Dr. Robert Johansson, the director of economics and policy analysis at the Washington-based American Sugar Alliance, spoke about sugar cane prices and what the league wants in a new bill.
Fair prices
Johansson’s talk focused on “fair prices.” What’s fair for consumers and farmers is subjective, and often in contrast to each other. Johansson said a fair price covers the cost of production, lets governments invest in farms, and lets mills invest in equipment.
Sugar futures are up about 53% since January 2014. As of November 2023, sugar was at its highest price since 2011. And it could still climb. According to the USDA, retail prices for sugar and sweets are expected to increase by 5.6% in 2024.
More than 70% of domestic sugar production is utilized by major food producers. Those producers have argued that sugar prices are too high, or are causing inflation. Johansson rebutted those arguments.
“Wholesale prices have been below what’s charged,” Johansson said. “There is no relation to the wholesale sugar price and what’s charged by food companies.”
In 1980, a Hershey’s Milk Chocolate Bar cost 25 cents. Today, it’s about $1.20. But sugar in 1980 cost about 3 cents a pound, and today it costs a little over 2 cents. Johansson said the increase in Hershey’s prices is due to labor and benefit costs.
That’s where the farm bill comes in.
Labor costs and safety nets
The last farm bill, the Agriculture Improvement Act, was passed in 2018. In November 2023, President Joe Biden signed an extension of the bill through Sept. 30, 2024.
Johannson said a new bill is needed due to events over the past five years, such as hurricanes, the COVID-19 pandemic, the war between Russia and Ukraine, contentious U.S.-China trade relations, war in the Middle East and more.
“We’re gonna be taking our message to the Hill,” Johansson said. “We’ll be talking about what we want to see in a new farm bill.”
Jim Simon, general manager of the American Sugar Cane League, said the farm bill keeps foreign governments from dumping foreign sugar into the U.S. market. It also helps finance sugar inventory until it is sold. Once sugar is produced from cane, it is stored in a warehouse and takes almost a year to sell. During that time, the farm bill provides a financing mechanism that allows producers to borrow against that inventory.
“The safety net rate was last set in 2018, so we’re always looking for ways to keep up with the cost of production,’ he said.
Overall farm costs in Louisiana are about $3.5 billion, according to USDA estimates. Since the last farm bill, prices have gone up for fertilizer and equipment, but labor costs are what have hurt Louisiana farmers most, Simon says.
The Department of Labor implemented a change in the way wages are set for the H-2A guest worker program that it said would make wages more predictable and “add new protections for worker self-advocacy, better protect workers against retaliation, make foreign labor recruitment more transparent and enhance the department’s enforcement.” Simon said the change has nearly doubled wage rates for 3,000 to 4,000 workers each year. The American Sugar League has sued the Department of Labor over the rule.
“These are jobs American workers don’t want,” he said. ”We’re not talking about reducing wages, we’re talking about fair wages more in line with what we do for these temporary workers.”
Simon said the league has other ideas in mind to help modernize the safety net, but those aren’t public yet. Sugar cane producers plan to visit Washington, D.C., in the coming months to advocate for more income support.