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subsidy keeps state's sugar from souring

October 17, 1985|DANIEL P. PUZO | Times Staff Writer

GONZALES, Calif. — In a dim corner of the Palace Restaurant during a slow noon hour, Neil Fanoe, Clarence (Toots) Vosti and Tondre Alarid railed against the political and economic forces that seem to conspire against their livelihoods.

The three men have a combined total of 120 years of experience as sugar beet farmers and are awaiting word from Washington whether 1985 will be their last harvest for the gnarled root that is processed into refined white sugar.

The topic is heated now because the farm bill--the nation's agricultural blueprint--is undergoing review. One of the issues involved is whether the federal government should continue to establish a minimum price for sugar. The debate over farm legislation continues in the Senate this week and ultimately awaits action by President Reagan. To date, the House of Representatives already has voted by a sizable margin to set raw sugar prices at 18 cents a pound for the next five years.

Far from the action on Capitol Hill, but center stage in the area that virtually introduced sugar beets to California, the three farmers discussed why sugar's fate teeters on a precipice.

Over steaks in a restaurant in the heart of the Salinas Valley, blame for the state's troubled sugar beet production was placed at the feet of the soft-drink companies, the manufacturers of artificial sweeteners, heavily subsidized imported sugar and shortsighted consumer groups.

And there's certainly enough blame to go around when the discussion turns to the decline in the demand for sugar, recently called by Public Voice, a Washington-based consumer advocacy group, the "most important additive in the nation's food supply."

The sugar industry continues to reel from the constant negative publicity it receives as a result of being linked to dental cavities. It has also been painted as the villain in advertisements for artificial sweeteners throughout the past 25 years.

Another blow was delivered when the giant soft-drink companies began sweetening beverages with a mixture of sugar and corn syrup, thus dramatically reducing demand. Finally, sugar beets and cane are raised in many parts of the world, particularly in less-developed countries, and most other nations are willing to accept considerably less money for their crop than their U.S. counterparts. (Currently, the United States imports about one-third of the sugar used in this country.)

Under this umbrella of problems, the growers await word on whether the Senate or President will allow the fixed price of sugar to fall substantially from its current level of about 19 cents a pound. Worse, in the view of these farmers, would be a federal decision to permit the world market to dictate prices. Either of these actions is likely to destroy the domestic sugar industry, the three Salinas-area farmers are convinced.

Furthermore, each predicts that U.S. consumers can expect across-the-board price increases on the incredibly wide array of processed foods that include sugar if the domestic supply evaporates.

"If Congress does not pass a favorable farm bill, then we are out of business," said Vosti, 63, a short, stocky man with 47 years' experience as a beet grower.

A few sugar processors and consumer groups don't buy Vosti's argument. Opponents state that past legislation has benefited only a relative handful of big growers and the multinational corporations that operate the refineries.

A leading critic of sugar price supports is Public Voice, which is active in pressuring Congress to lift the U.S. sugar price guarantee and allow the sweetener's price to float in a free market.

Public Voice representatives acknowledge there will be changes in the domestic industry as a result of free-market pressure, but that only inefficient growers and processors will be forced out of business if price guarantees are eliminated.

"Should the federal government be in the position of supporting inefficient businesses?" asked Ellen Haas, Public Voice executive director. "If a small factory fails, then we don't keep them propped up. So, if the (U.S.) sugar industry is inefficient and (sugar is) a non-essential food (then) . . . why do we continue to provide benefits to such a small number of farmers?"

Haas said that there are only 12,000 growers raising sugar beets or cane in this country. Keeping the federal price guideline at its current level is worth, on the average, about $250,000 to each of them.

Public Voice calculates the subsidy per farmer by estimating that artificially high sugar prices have meant that U.S. consumers paid about $3 billion more for the sweetener than would be necessary under world market conditions.

"I think the current situation is outrageous and costly. It puts the burden on consumers rather than on a small group . . . of comfortable, financially stable farmers," Haas said.

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