SUGAR ACT AMENDMENTS OF 1962

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP64B00346R000300100004-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 92
• Document Creation Date: December 16, 2016
• Document Release Date: April 8, 2005
• Sequence Number: 4
• Publication Date: June 15, 1962
• Content Type: REPORT

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od Session No. 1829
SUGAR ACT AMENDMENTS OF 1962
JUNE 15, 1962.-Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. COOLEY, from the Committee on Agriculture, submitted the
following
REPORT
[To accompany H.R. 121541
The Committee on Agriculture, to whom was referred the bill
(H.R. 12154) to amend and extend the provisions of the Sugar Act of
1948, having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
STATEMENT
H.R. 12154 extends the Sugar Act of 1948, with amendments, from
June 30, 1962 to December 31, 1966.
Basically, the Sugar Act of 1948, which superseded the Sugar Act of
1937, is intended to do three things: (1) Make it possible, as a matter
of national security, to produce a substantial part of our sugar require-
ments within the continental United States and to do this without the
consumer-penalizing device of a high protective tariff; (2) assure U.S.
consumers of a plentiful and stable supply of sugar at reasonable
prices; and (3) permit nearby friendly foreign countries to participate
equitably in supplying the U.S. sugar market for the double purpose of
expanding international trade and assuring a stable and adequate
supply of sugar.
The Sugar Act has been notably successful in attaining all three of
these major objectives.
Under its protection, nearly one-third of our total consumption of
sugar is produced by beet and cane growers within the continental
limits of the United States and total domestic production (including
Hawaii, Puerto Rico, and the Virgin Islands) fills more than one-half
of our sugar quota. The Sugar Act has given us this security in
supplies, and sugar prices to consumers have been remarkably stable
during the lifetime of the act.
H.R. 12154 perpetuates these objectives and strengthens the Sugar
Act by assigning a greater portion of the U.S. market to our own do-
mestic beet and cane producers, and by a more equitable and depend-
able distribution of quotas, for the remainder of our market, among
the producers of friendly nations, principally to the good neighbors of
the United States in the Western Hemisphere.
72000
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SUGAR ACT AMENDMENTS OF 1962
MAJOR PROVISIONS
To accomplish these objectives, the bill:
1. Extends the act to December 31, 1966.
2. Increases the quotas for domestic sugar producing areas at
current levels of sugar consumption (9.7 million tons) about 625,000
tons and provides that those areas receive 63 percent of increases in
consumption as compared to 55 percent under current legislation.
The quotas for each of the domestic sugar producing areas at the
sugar requirement level of 9.7 million tons under current legislation
and under the committee bill are as follows:
Present
legislation
Domestic beet sugar
Mainland cane sugar
Hawaii
------------------------------
norIsl- ---------------------------------------------------------------
Virginn Islanands
Total
2,110,627
649, 460
1,117,936
1,231,682
16,795
2,650,000
895,000
1,110,000
1,140,000
15,000
3. The basic quota would be allocated as follows:
Tons Tons
Domestics---------------- 5, 810, 000 Ecuador ------------------ 30, 000
Cuba------------------1,500,000 Haiti -------------------- 25, 000
Philippines--------------- 1,050,000 Guatamala--------------- 20, 000
Peru--------------------- 200,000 Argentina ---------------- 20,000
Dominican Republic ------- 200, 000 South Africa-------------- 20, 000
Mexico------------------- 200, 000 Panama ------------------ 15, 000
Brazil-------------------- 190, 000 El Salvador --------------- 10, 000
British West Indies-------- 100, 000 Paraguay----------------- 10, 000
Australia----------------- 50, 000 British Honduras ---------- 10, 000
Republic of China--------- 45, 000 Fiji Islands--------------- 10, 000
French West Indies-------- 40,000 Netherlands-------------- 10, 000
Colombia----------------- 35000 Mauritius ---------------- 10, 000
Nicaragua---------------- 30,000
Costa Rica--------------- 30, 000 Total -------------- 9,700,000
India-------------------- 30,000
4. The Cuban quota of 1.5 million tons would be authorized for purchase from
other countries on a temporary basis through December 1963, as follows:
Tons
Philippines ------_----_150, 000
Peru--------------------- 150,000
pominican Republic------- 150, 000
Mexico------------------- 150,000
Brazil-------------------- 150,000
British West Indies-------- 150, 000
Australia----------------- 150, 000
Tons
Republic of China--------- 150,000
India-------------------- 100,000
South Africa-------------- 100, 000
Mauritius---------------- 100, 000
Total-------------- 1,500,000
5. Revises the formula provided in section 201 of the act to employ
the price of raw sugar and the USDA parity index, as they were
related in the years 1957 to 1959, as a guide to the fairness of prices
between producers and consumers. The current provision of the act
relates the price of refined sugar to the Consumer Price Index, as
published by the Bureau of Labor Statistics, as it was related in the
years 1947 to 1949. The price for refined sugar is now approximately
0.8 cent per pound below the level indicated by the price formula.
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SUGAR ACT AMENDMENTS OF 1962 3
The committee accepts the new formula on the basis that it will
be administered as the price objective set forth in section 201 of the
act.
6. Provides that a deficit in the quota or proration for any domestic
area or foreign country would be prorated, in accordance with their
basic quota or prorations, to quota coun tries with which the United
States maintains diplomatic relations and which are able to fill such
deficit. If these countries cannot fill all of such deficit, the remainder
would be apportioned by the Secretary to nonquota countries with
which we are in diplomatic relations. When we are not in diplomatic
relations with Cuba or any other quota country and one of the coun-
tries named to supply the replacement sugar is unable to do so, the
deficit would be authorized for purchase from other countries named
in the bill and in the event they cannot supply it from other friendly
countries.
7. Provides that any nation or political subdivision thereof which
hereafter unlawfully expropriates American-owned property or other-
wise seriously discriminates against such property and fails to take
remedial action within a reasonable time will have its quota, proration,
or authorization to import sugar suspended if the President finds such
action to be in the national interest.
8. Provides that if the President, in his discretion, finds that any
nation discriminates against U.S. citizens in its sugar program, he
shall suspend the quota or other authorization of such nation.
9. Authorizes the payment of $22.8 million to the Dominican Re-
public Government and to American sugar companies for the entry
fee imposed on nonquota sugar purchases during the Trujillo regime.
10. Provides that quotas apply to the sugar content of any sugar-
containing product or mixture which does not have a recent history
of importation unless the Secretary finds that importation will not
substantially interfere with attainment of the objectives of the act.
The Secretary may also apply quotas to the sugar content of any
sugar-containing product or mixture that has a history of importation
in recent years if he finds that importation of the product or mixture
will substantially interfere with attainment of the objectives of the act.
. 11. Provides direct-consumption sugar limitations substantially
similar to those in present legislation for Hawaii, Puerto Rico, and
the Republic of the Philippines. It would limit the direct consump-
tion sugar that may be entered from foreign countries other than the
Republic of the Philippines to the average entries during the years
1957 to 1959 of such sugar from countries which receive a proration
of 20,000 tons or less under the bill. No direct consumption im-
ports would be permitted from countries, other than the Philippines,
with quotas of more than 20,000 tons.
12. Provides that replacement supplies of sugar authorized for
importation in lieu of quotas of countries not in diplomatic relations
with the United States, such as Cuba, shall be in raw sugar so long as
raw sugar is reasonably available from all authorized sources com-
bined. If the Secretary finds that raw sugar is not so reasonably
available, he may authorize the purchase of direct-consumption
sugar as required.
The language of this section has been changed from that in section
408(b)(3) of the present act to make clear that the purchase of direct-
consumption sugar may not be authorized from a country if any
other country or countries eligible under section 202(c)(5) have raw
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4 SUGAR ACT AMENDMENTS OF 1962
sugar reasonably available. The present act has been interpreted by
the Secretary to permit the importation of direct-consumption sugar
from certain countries in lieu of Cuba's quota, although raw sugar
was available from other authorized sources. The changed language
in section 202(c)(5) will not permit such an interpretation.
13. Sets up a small liquid sugar quota to permit the importation of
sirup of cane juice of the type of Barbados molasses and eliminates
other liquid sugar quotas.
14. Prohibits the importation into the Virgin Islands of any sugar
not produced in domestic areas and only sugar produced in the
Virgin Islands would be eligible to be brought into the continental
United States within the quota for the Virgin Islands.
15: Provides that in any year when production is restricted in the
beet sugar area, a national reserve of not more than the acreage
required to yield 50,000 tons of sugar be assigned to farms on a fair
and reasonable basis without regard to any previous production
history for the purpose of making acreage available for expansion of
the beet sugar industry. Also clarifies the circumstances under
which the Secretary would establish grower proportionate shares and
the Secretary's authority to consider the sugarbeet production
history of farm operations in lieu of or in addition to the sugarbeet
production history of land units, in regions where the Secretary
determines that sugarbeet production is organized generally around
persons rather than units of land and where personal history was
generally used prior to 1962.
Cuba in years past has been our largest supplier of sugar. In re-
sponse to political upheavals in Cuba, Congress in 1960 authorized
the President to reduce that country's quota in our market. Under
this authority, the Cuban quota was brought down to zero and, by a
special formula provided by the Congress, the sugar formerly supplied
by Cuba now is obtained from domestic sources and from friendly
nations. H.R. 12154 assigns to our own producers and to producers
in friendly nations a portion of the sugar formerly supplied by Cuba,
but the legislation holds to a hope that Cuba may soon throw off its
Communist yoke and return to the family of free American nations.
In this firm expectation, this legislation reserves a substantial portion
of Cuba's former quota, for reassignment in the future to a free and
independent Cuba.
U.S. SUGAR CONSUMERS
While the Sugar Act has served to encourage the development of a
solid and stable, and constantly growing, sugar industry and economy
in continental United States, the committee stresses particularly the
benefits it has brought to U.S. consumers of sugar.
No other basic food has been more stable in supply and price, in
wartime and in peacetime, than has sugar. The pressures that have
caused great fluctuations in the prices of some foods, particularly the
foods that we import, have had little inflationary effect upon sugar.
The following simple chart best illustrates the benefits to U.S. con-
sumers, by comparing the stable sugar price line with the fluctuations
and inflations in the prices of cocoa and coffee, two other imported
and important foods, which operate under no program similar to
that provided by the Sugar Act:
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C
SUGAR ACT.AMENDME
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H.R. 12154 provides for expansion of sugar production in the United
States. It assigns to the domestic areas on a permanent basis the
right to supply a substantial portion of the sugar not obtained from
Cuba. It raises domestic quotas to almost 60 percent of the present
total market for sugar and furthermore it assigns 63 percent of future
market growth to the domestic areas. These changes increase total
domestic quotas by about 625,000 tons or about 12 percent.
The desire to produce sugar crops has been most intense on the
mainland. Accordingly, this legislation provides quotas for the three
offshore domestic areas adequate for their present and near-term
production potentials with provision for quota increases if future
production exceeds these quotas.
The quota for the domestic beet sugar area is increased more than
25 percent to 2,650,000 tons. The quota for the mainland cane
sugar area at the present level of consumption is increased more than
35 percent to 895,000 tons. The domestic areas' 63 percent of
market-growth or a little more than 100,000 tons a year would go
to the two mainland areas in ratio to their basic quotas, that is, about
three-fourths to the beet sugar area and one-fourth to the cane area.
In view of the need to replenish inventories, the quota for the
domestic beet sugar area is sufficient to cover all of the sugarbeets
likely to be processed in existing factories plus an additional amount
that would permit entry of some additional localities of production.
When any domestic area is unable to fill its quota the deficit,
under this legislation, would be assigned to foreign importations
rather than to other domestic areas. On the other hand, if produc-
tion increased in the offshore domestic areas, foreign importations
would be reduced sufficiently to enable the offshore domestic areas
to market increased production up to the entitlement that they
would have had if the current law had been extended without amend-
ment. These arrangements will stabilize the marketing opportunities
of each of the domestic areas.
The provisions of the sugar bill providing for growth and expan-
sion of the beet sugar industry take the form of an amendment to sec-
tion 302(b) of the present law, the section which authorizes the Sec-
retary to establish and allocate proportionate shares to sugarbeet
farms.
Under the terms of the bill, the Secretary shall, in order to make
available acreage for growth and expansion of the beet sugar industry,
reserve each year, from the national sugarbeet acreage requirement
established by him, not in excess of the acreage required to yield
50,000 short tons, raw value of sugar. On the basis of the national
average yield of 2j2 tons of sugar per acre, this provision would per-
mit the Secretary to establish a sugarbeet acreage reserve of 20,000
acres. In areas where the sugar yield per acre is less, the sugarbeet
acreage reserve might be somewhat greater and in the areas where
the sugar yield per acre is higher than the national average, the sugar-
beet acreage reserve might be less than 20,000 acres. In any event,
regardless of the sugar yield per acre of any area to which the sugar-
beet acreage reserve might be distributed, such area will have an
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SUGAR, ACT AMENDMENTS OF 1962
opportunity to produce enough sugarbeets to support the operation
of a sugar plant having a production capacity of 1 million hundred-
pound bags of refined sugar.
The reasonableness of this figure is confirmed by three facts: (1)
The average production of the 61 beet sugar plants in operation in
1961 in the United States was less than 800,000 hundred-pound bags
of refined sugar. (2) A study by an independent, reputable engineer-
ing firm recently recommended to interested producers in one of the
important sugarbeet producing areas the economic feasibility of a
factory with a capacity slightly under 1 million bags. (3) Even in
areas where conditions might suggest the feasibility of a plant even-
tually having a larger capacity, it is generally recognized that a 1-
million-bag output would be adequate to underwrite successfully the
initiation of such a plant.
The bill provides that the sugarbeet acreage reserve shall be estab-
lished only in years when restrictive proportionate shares are in
effect. It is unnecessary to establish acreage priorities in years when
plantings of producers, whether old or new, are not restricted by the
Government.
The bill provides that the sugarbeet acreage reserve shall be dis-
tributed by the Secretary, after investigation and notice and oppor-
tunity for public hearing, on a fair and reasonable basis to farms
without regard to other acreage allocations to States or areas within.
States. Except as indicated, the bill does not contain any standards.
to guide the Secretary in distributing the sugarbeet acreage reserve.
The sugarbeet acreage reserve is available for distribution to new
growers supplying a new factory in a new area. The Secretary of
Agriculture stated in his testimony before the House Agriculture
Committee that, in distributing the sugarbeet acreage reserve, he
would give priority to new growers for a now factory over new growers
for an old factory. That such priority is inherently assured by the
language and the origin of the pertinent provisions of the bill was
underscored by the comments of Congressman Poage in the record of
the House hearings.
In the event of the proposed opening of more than one new factory
in a single year, the Secretary would have to decide which new growers
group, taking into account all the relevant facts, has the more valid
claim. The Secretary's decision in 1 year would, of course, be
without prejudice to the position of any losing group in a subsequent
year.
Quite properly the bill does not undertake to define a new area.
A new area could include a State where sugarbeets have never been
commercially grown, such as Maine or Missouri; a State where
sugarbeets have not been commercially grown for a number of years,
such as New York; a State where only a few beets, for sugar or for
seed, are now being grown, such as Texas, New Mexico, Indiana, or
Arizona; or, a State where sugarbeets are being commercially grown
in significant volume, such as Nebraska, California, North and South
Dakota, Idaho, Washington, or Minnesota.
Growth and expansion of the beet-sugar industry is also possible
through increases in the capacities of existing plants. Subject to the
priority claims of new growers for new plants in new areas, the sugar-
beet acreage reserve is available for distribution to new growers
supplying beets to an old plant which is being expanded. Such new
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tS SUGAR ACT AMENDMENTS OF 1962
growers would, of course, have prior claims over old growers who,
might wish to expand their production to supply the additional beets
needed for the expanded plant. If two or more plants are expanded
in a single year, the Secretary has to decide which new grower groups,
or which old grower groups, have the most valid claim to all, or some
part, of the sugarbeet acreage reserve available for distribution.
The sugarbeet acreage reserve provided by the bill is in addition
to provisions already in the law authorizing the Secretary to protect
the interest of new and small producers.
It is estimated that about 70,000 tons of quota will be credited
annually to the beet area as a result of its share of the 63 percent of
market growth reserve for continental areas. It is generally assumed
that U.S. market growth is about 150,000 tons a year; 63 percent of
this amount is roughly 95,000 tons. Under the bill the 95,000 tons
is split approximately 3 to 1 between the domestic beet and mainland
cane areas-70,000 tons for beets, 25,000 tons for cane.
The 50,000 tons needed for the sugarbeet acreage reserve is. thus
covered by the annual growth increment accruing to the domestic
beet area. The difference (20,000 tons) between the expected growth
increment (70,000 tons) and the maximum sugarbeet acreage reserve
(50,000 tons), however, cannot be construed as being available for
"expansion" of the existing industry because it is not enough to
absorb the industry's annual technological growth, which amounts to
about 50,000 tons.
Accordingly, under the terms of the bill most of the annual tech-
nological growth of the industry-that is, higher sugar yields per
acre--will have to be absorbed by the old beet grower group.. This
could involve a cut in old grower acreages.
The probability of future acreage reductions for old growers is
compounded by the level of the basic beet quota-2,650,000 tons as
compared with a 1962 crop now estimated to yield 2,800,000 tons of
sugar. The low level of the industry's current carryover, due to
last year's below average yields, will probably avoid the need for
acreage cuts for old beet growers for 1963. Under these circumstances,
as Secretary Freeman has said, acreage restrictions next year appear
unlikely.
In summary: The sugarbeet acreage reserve may equal only the
equivalent of one million-bag factory a year for new growers. The
1 inil.lion-bag-a-year technological growth of the industry may have
to be carried, in large part, by the old growers-and by the new
growers after they enter the business. The conservative level of the
basic quota, and the modest growth increment, awarded the domestic
beet industry in the bill reveal clearly, on analysis, the willingness of
the beet industry, old and new, to make a real contribution to industry
unity, to permit the foreign suppliers to continue to have a guaranteed
share of about 40 percent of the U.S. sugar market.
THE PHILIPPINES
A quota of 1,050,000 tons is established in this legislation for the.
Republic of the Philippines. This represents an increase of 70,000
tons above the quota provided in current legislation and above the
terms of the Philippine Trade Agreement.
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SUGAR'ACT AMENDMEXTS OF 1962
QUOTAS FOR OTHER FRIENDLY NATIONS
After the assignment of quotas to domestic continental and offshore
areas, and to the Philippines the balance of our requirements of
2,840,000 tons-based on domestic consumption of 9,700,000 tons
annually-would be obtained from other friendly countries, by per-
manent quotas during the 5-year duration of this extension of the act,
and by year-by-year purchases from designated countries of the
amount of the sugar quota reserved for Cuba.
The quota reserved for Cuba, against the day when she returns to
the brotherhood of free nations of the Western Hemisphere, amounts
to 1,500,000 tons. Prior to the entry of Communist rule on the island,
Cuba's quota amounted to more than 3 million tons. It is the firm
position of this committee that a substantial portion of Cuba's old
quota should be reserved, and not assigned permanently to other
countries, so that prompt and effective economic strength shall be
assured a free Cuba when she emerges from the wreckage of Com-
munist domination.
This bill assigns permanent quotas of approximately 1,340,000 tons
to foreign countries other than Cuba and the Philippines. The quotas
of all foreign suppliers are substantially increased., The 1,500,000
quota reserve for Cuba will be purchased from other countries on a
year-to-year allocation basis, by act of the Congress. The quota for
the British West Indies embraces all the territories that are members
of the B.W.I. Sugar Association. This includes British Guiana.
In making the temporary allocations after 1963 to other nations,
from the Cuban reserve quota, the Congress will review and take into
consideration among other factors, the purchases by the various sugar-
producing countries of agricultural commodities in the United States,
and will give special consideration also to good-neighbor countries of
the Western Hemisphere.
NEW BASE FOR QUOTAS
Prior to the upheaval in Cuba, the quotas for purchases of sugar
from foreign suppliers followed somewhat the pattern of the participa-
tion of these suppliers in our market in the years before the Sugar Act
came into being. This basis for quota assignment was completely
upset when Cuba ceased to be a supplier, and assignments of purchases
have been largely on a temporary and experimental basis since that
time, under special enactments of the Congress.
This legislation extending the act departs as a matter of necessity
from the historical supply basis in assigning foreign quotas, and turns
to what may well be a more solid basis of making such quota assign-
ments, by dependency primarily upon the ability of sugar-producing
and friendly countries to supply our market at the time that sugar
is needed after giving consideration to production totals, to the
facility with which sugar may be delivered, and with especial emphasis
upon doing business with Western Hemisphere countries.
The following table shows the sugar production, consumption, and
exports by countries:
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SUGAR ACT AMENDMENTS OF 1962
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SUGAR ACT AMENDMENTS OF 1962 11
SAFEGUARDING AMERICAN INTERESTS
This legislation takes particular caution to safeguard American in-
terests in countries from which we purchase sugar, against expropria-
tion of property and investments of U.S. citizens and against dis-
crimination especially against American owned sugar properties and
facilities in these countries. The committee directs specific attention
to the sections of this legislation which embrace these safeguards.
DOMINICAN REPUBLIC REFUND
While Public Law 86-592, July 5, 1960, and. the legislative history,
did not consider the imposition of any special fees on any nonquota
purchase sugar, the Department of Agriculture Sugar Regulation 818,
Amendment 3 (Sept. 23, 1960), did impose a fee of 2 cents per pound,
which was subsequently raised to 2Y cents per pound under Depart-
ment of Agriculture Sugar Regulation 819 (Dec. 22, 1960), on all non-
quota purchase sugar imported from the Dominican Republic. The
fees so collected until March 31, 1961, when the importation of non-
quota purchase sugar from the Dominican Republic was totally eliini-
nated under the authorization of Public Law 87-15, March 31, 1961,
totaled $22,755,153.67.
Action taken in imposing such fees was designed to prevent a wind-
fall to the then Trujillo Government in the Dominican Republic.
The committee was informed that when the Trujillo Government
ceased to exist and the present U.S. supported Dominican Govern-
ment came into power, it was assumed by the Dominican people that
this money, having been withheld by the U.S. Government in order
to prevent the benefits of sales in the U.S. premium market of non-
quota sugar going to the Trujillo Government, would then be re-
turned by the U.S. Government. The American private sugar com-
pany operating in the Dominican Republic, together with a private
Dominican sugar company, entered into binding agreements with the
Government of the Dominican Republic providing:
1. In the event such legislation is enacted by the U.S. Congress
authorizing the return or an amount equivalent to the collected fees,
these private companies with respect to their shares of the fees so
paid would forego receiving any dollars, so that all the dollars so
returned would be deposited to the account of the Government of
the Dominican Republic, thereby bolstering the difficult foreign ex-
change position of that country.
2. The private sugar companies would receive the equivalent in
pesos of the dollar amount they paid. From this amount the com-
panies would pay Dominican taxes and small amounts to farmers
who originally supplied some of the sugar, and would utilize the net
remaining amount of pesos for construction of houses in the fields for
use of the Dominican laborers and other comparable economic and
social programs, such as improvements of roads, etc. In the case of
the American company, its claim of $6,885,861 would thus be dis-
tributed approximately as follows:
000
Pesos for taxes ------------------------------------------------ 3,746, 000
Pesos for the small farmers______________________ ------------------------------------- 331,
______ - __ 2,808,861
Pesos for housing and roads---------------------
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In the case of the other private company, owned by Dominican
citizens whose claim totaled approximately $1 million, the distribu-
tion of the peso equivalent of $1 million would be along the same
proportions. In the case of the remaining sugar companies, all now
entirely owned by the Dominican Government, all the funds so
returned to them would be used for the benefit of the Dominican
people.
3. The South Puerto Rico Sugar Co. and the Dominican Govern-
ment-owned companies which had brought suit against the United
States in the Court of Claims on the ground that the tax had been
unconstitutionally imposed, would dismiss the law suits.
In view of the strong political importance attached to the returning
of this money in this way by the present U.S.-supported Dominican
Government, the committee considered this method to be that which
would provide important support to this new democratic government.
HISTORY AND OPERATIONS OF THE U.S. SUGAR PROGRAM
NATIONAL POLICY
For many years it has been the policy of the U.S. Government-for
defense and strategic reasons-to preserve within the United States
the ability to produce a substantial portion of our sugar requirements.
This has been done because sugar is an essential and vital food product
needed by American consumers, the supply of which on a worldwide
scale has been marked by periods of alternating scarcity and surplus.
A large portion of the world's sugar is grown in tropical countries
where cheap labor is abundantly available. An additional large
portion of world production is in countries which, like the United
States, provide protection or subsidy to their sugar producers.
It is unlikely that a significant amount of sugar would be grown in
the continental United States if American producers had to compete
on the open world market with sugar produced with cheap tropical
labor or under subsidy in other countries.
For years, protection was afforded to our sugar producers solely
through the tariff. Although the tariff did assist domestic producers,
it still left them exposed to the price fluctuations of the world sugar
market. It also increased the price of sugar to consumers in the
United States without assuring them of adequate foreign sources of
supply.
A quota system which prorated domestic consumption among pro-
ducers in the United States and a number of foreign countries was
developed and enacted as law in 1934. The quota system was
revised in 1937 and again in the present act which became effective
in 1948. Since initiation of the quota system, the tariff on sugar
has been reduced 75 percent and now represents only supplementary
protection to the sugar industry.
A tax of 0.5 cent per pound is imposed on all sugar manufactured
or imported into the United States. Payments are made to domestic
producers of sugarcane or sugar beets at a rate which ranges from 80
cents per hundredweight of recoverable sugar produced on small
farms to as little as 30 cents per hundredweight of production in
excess of 30,000 tons of sugar on large farms. To qualify for pay-
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 Approved For Release 2R0~5/04//1133.rCD A RDPgfB096246R00030010f904-8
ments under ' the program, producers must comply' with production
restrictions, pay fair wages to workers, and not employ child labor
and, if they are also processors, pay fair prices for sugarcane or sugar
beets.
Income to the Government from the tax on sugar has been very
substantially in excess of the amount disbursed as payments to
domestic growers during each of the years under the program. In
recent years the income from the tax has approximated $95 million
annually, while payments to growers have approximated $70 million.
Since 1937 there has been a net return to the Treasury of over
$450 million in the difference between collections on the sugar excise
tax and the actual cost of the stabilization program.
Table 1 below shows how the various supplying areas have partici-
pated in the U.S. sugar market from 1900 through 1961. It will be
noted that since 1948, all areas have shared equitably in the expanding
sugar market in the United States. The lower figures for Hawaii and
Puerto Rico in several recent years resulted from production diffi-
culties and this automatically increased the shares of the domestic
beet and mainland cane areas for such years. The major shift in
1960 and 1961 from Cuba to the Philippines and other foreign coun-
tries will be noted.
Tables 2 and 2(a) show the manner in which the quotas and "non-
quota purchase authorizations" have been distributed among the
various producing areas. Tables 2(b) and 2(c) show the final quotas
and authorizations for 1961 and unfilled balances, if any. Final
quotas of Hawaii, Puerto Rico, and the Virgin Islands reflect adjust-
ments for deficits.
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1-
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SUGAR ACT AMENDMENTS OF 1962
TABLE L -Entries and marketings of sugar in continental United States from all
areas, 1900 to date
11,000 short tons, raw value]
Continental
United States 2
Puerto
Virgin
Philip-
Other
foreign
Year 1
Total
Hawaii
Rico
Islands
pines
Cuba 8
coun-
Main-
tries
Beat
land
cane
1900-------------------------
2,413
92
312
252
36
(1)
25
353
1,343
1901-------------------------
2,963
198
364
345
69
(1)
2
650
1,435
1902-------------------------
2,574
233
373
360
92
6
492
1,018
1903-------------------------
3,143
258
278
387
113
(i)
9
1,198
900
1904-------------------------
3,023
259
415
368
130
(,)
31
1,410
410
1905-------------------------
3,118
335
390
416
136
(r)
39
1,029
773
1906-------------------------
3,359
518
273
373
205
(1)
35
1,391
564
1907-------------------------
3,701
496
394
411
204
(i)
13
1,618
565
1908-------------------------
3,331
456
415
539
235
(i)
19
1,155
512
1909-------------------------
3,730
648
332
511
244
(i)
42
1,431
622
1910-------------------------
3,789
546
355
555
285
(1)
88
1,755
205
1911-------------------------
3,801
642
361
506
323
6)
115
1,674
180
1912-------------------------
3,927
742
163
603
367
(I)
218
1,593
241
1913-------------------------
4,382
784
301
543
383
(1)
102
2,156
113
1914-------------------------
4,431
773
247
557
321
(i)
58
2,463
12
1915-------------------------
4,718
935
139
640
294
(1)
163
2,392
155
1916-------------------------
5,000
878
311
569
425
(1)
109
2,575
133
1917-------------------------
4,808
819
245
581
489
6
134
2,335
198
1918-------------------------
4,430
814
285
540
336
4
87
2,280
84
1919-------------------------
5,352
777
122
579
364
10
88
3,343
69
1920-------------------------
6,337
1,165
176
550
413
13
146
2,881
993
1921-------------------------
5,412
1,091
327
541
469
6
165
2,590
223
1922-------------------------
6,807
722
296
568
360
6
275
4,527
53
1923-------------------------
5,831
943
172
519
342
2
238
3,426
189
1924-------------------------
6,483
1,166
90
677
393
2
339
3,692
104
1925-------------------------
6,934
977
142
755
600
11
493
3,923
33
1926-------------------------
7,024
960
48
747
559
6
380
4,280
44
1927-------------------------
6,809
1,170
72
777
574
6
531
3,650
29
1928-------------------------
6,691
1,135
136
878
674
11
575
3,249
33
1929-------------------------
7,587
1,089
218
882
507
3
711
4,149
28
1930-------------------------
6,683
1,293
215
868
809
6
794
2,645
53
1931-------------------------
6,727
1,343
206
998
796
2
872
2,482
28
1932 --------------------------
6,303
1,319
160
1,048
940
5
1,028
1,791
12
1933-------------------------
6,331
1,366
315
990
793
5
1,249
1,573
40
1934-------------------------
6,574
1,562
268
948
807
5
1,088
1,866
30
1935 --------------------------
6,277
1,478
319
927
793
2
917
1,830
11
1936-------------------------
6,833
1,364
409
1,033
907
4
985
2,102
29
1937 --------------------------
6,860
1,245
491
985
896
8
991
2,155
89
1938-------------------------
6,619
1,448
449
906
815
4
981
1,941
75
1939 --------------------------
7,466
1,809
587
966
1,126
6
980
1,930
62
1940-------------------------
. 6,443
1,550
406
941
798
0
981
1,750
17
1941-------------------------
8,009
1,952
411
903
993
5
855
2,700
190
1942_________________________
5,655
1,703
407
751
836
0
23
1,796
39
1943-------------------------
6,466
1,524
460
866
642
3
0
2,857
114
1944-------------------------
6,942
1,155
515
802
743
3
0
3,618
106
1945-------------------------
5,997
1,043
417
740
003
4
0
2,803
87
1948-------------------------
5,657
1,379
445
633
867
5
0
2,282
46
1947-------------------------
7,759
1,574
383
842
969
3
0
3,943
45
1948-------------------------
7,084
1,656
456
714
1,013
4
252
2,927
62
1949-------------------------
7,588
1,487
557
769
1,091
4
525
3,103
52
1950-------------------------
8,279
1,749
522
1,145
1,053
11
474
3,264
61
1951-------------------------
7,758
1,730
457
941
959
6
706
2,946
13
1952-------------------------
7,991
1,560
579
972
983
6
860
2,980
51
1953-------------------------
8,282
1,749
513
1,087
1,118
12
932
2,760
111
1954-------------------------
8,240
1,802
501
1,040
1,082
10
974
2,718
113
1955-------------------------
8,396
1,797
500
1,052
1,080
10
977
2,862
118
1956_________________________
8,992
1,965
601
1,091
1,135
13
982
3,089
126
1957-------------------------
8,916
2,066
636
1,037
912
15
906
3,127
217
1958-------------------------
9,076
2,240
680
630
823
6
980
3,438
279
1959-------------------------
9,240
2,241
678
977
958
12
980
3,215
279
1960-------------------------
9,522
2,165
619
845
896
7
1,155
2,390
1,445
19619-----------------------
9,701
2,608
750
1,045
980
16
1,355
0
2,947
I Data on fiscal year basis 1900-18; calendar year basis 1919 to date.
2 Crop year production 1900-30.
8 Excludes sugar imported for foreign claimants as follows: 1942, 144,000 tons; 1943, 446,000 tons; 1944,
262,000 tons; 1946, 337,000 tons; 1946, 368,000 tons; 1947, 230,000 tons.
4 Preliminary.
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 Approved For Release 2005//0~4//11~ . CIA-RDP64B00346R0003001OD004-8
TABLE 2.-Fitial basic quotas, Sugar Act of 1948
FIRST YEAR OF ACT, EACH MAJOR EXTENSION AND RECENT YEARS
[Short tons, raw value]
1062 as of
May 31
Area or country
1948
1953
1957
1960
adjusted
to annual
rate
Total U.S. "requirements"---------------------
7,200,000
8,100,000
8,975,000
10,400,000
9,700,000
Domestic beet------------------------------
1,800,000
1,800,000
1,948,357
2,267,301
2,110,626
Mainland cane -----------------------------
500,000
500,000
599,528
697,670
649,460
Hawaii-------------------------------------
1,052,000
1,052,000
1,087,373
1,265,375
1,177,936
Puerto Rico--------------------------------
910,000
1,080,000
1,136, 987
1,323,111
1,231,682
Virgin Islands------------------------------
6,000
12,000
15,505
18,043
16,796
Philippines---------------------------------
082,000
974,000
980,000
980,000
980,000
Cuba---------------------------------------
1,023,480
2,574,720
2,993,897
2,419,655
----_----_-
Other foreign countries (details below) ------
26,520
107,280
213,353
432,945
325,076
Withheld from Cuba for allocation to other
countries---------------------------------
-----------
-----------
-----------
995,900
3,208,424
Total-----------------------------------
7,200,000
8,100,000
8,975,000
10,400,000
9,700,000
PRORATION OF QUOTAS FOR FOREIGN COUNTRIES OTHER THAN CUBA AND THE
REPUBLIC OF THE PHILIPPINES
Peru-------------------------------------------
5,903.6
50,109
77,124
138,827
108,518
Dominican Republic---------------------------
3,512.2
26,641
80, 420
130, 957
96,308
Mexico-----------------------------------------
3,204.1
11,048
43,134
115,809
80,108
Nicaragua--------------------------------------
5,429.2
7, 550
11, 588
19, 766
15, 748
Haiti-------------------------------------------
489.5
2,578
6,127
9,105
7,640
Netherlands------------------------------------
115.7
-----------
3,435
4,427
3,040
China------------------------------------------
153
0
----------
3,371
4,218
3,802
Bong Kong-------------------------------------
.
----------
3
3
4
Canada-----------------------------------------
299.7
-----------
631
631
632
United Kingdom-------------------------------
188.2
-----------
516
610
516
Belgium----------------------------------------
156.3
-----------
182
182
182
Dutch East Indies------------------------------
112.3
-
------------------------_-
177.9
-
-------------------------
1,823.3
-----------
-----------
-----------
-----------
El Salvador------------------------------------
4,360.3
3,992
----------
-----------
-----------
Venezuela--------------------------------------
154.0
-
-----------
---------------------------
139.8
-----------
----- -----
-----------
Other countries---------------------------------
1 22.9
"Unallottedreserve" or "unspecified countries"
250.0
5, 364
-
-----------
-------
-----------
-----------
3, 367
4,202
,
Panama----------------------------------------
-----------
-----------
3,371
-----------
3,802
British Guiana---------------------------------
-----------
-- ---
84
84
84
Total-------------------------------------
26,520.0
107,280
213,353
432,945
325,076
1 Argentina, 7.7 tons; Australia, 0.1 ton; Brazil, 0.7 ton; Colombia, 0.2 ton; Costa Rica, 11.0 tons;
Italy, 1.0 tons; Japan, 2.1 tons.
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 Apprjved For Release 2005/04/13 : CIA-RDP64B00346R000300100004-8
SUGAR ACT AMENDMENTS OF 1962
TABLE 2(a).-Nottquota purchase al{ocations, 1960 and 1961, subject to sec. 408(B)
of the act
[Short tons, raw value]
Philippines -----------------------------------------------------------------
176, 176,426
490, 731
Peru ---------------------------------------------------------------`-------
135, 000
514, 870
Dominican Republic --------------------------------------------------------
321,857
222, 723
Mexico----------------------------------------------------------------------
284, 628
589,691
Nicaragua-------------------------------------------------------------------
22.000
25, 897
I3ait1------------------------------------------------------ -----------------
26, 567
37, 005
Netherlands
6, 129
5, 851
China (Taiwan) ----------------------------------------- -----------------.
6,258
166
048
Panama
6,258
,
6,020
Costa Rica-----------------------
6,267
26, 282
Canada _--------------------------------------------
1,657
1,266
United Kingdom-----------------------------?--------------------- .......
1,355
1,034
Belgium---------------------------------------------------------------------
478
1,453
IHong Kong----------- ----------------------------- ........
8
27
Federation of West Indies and British Guiana -_----------------------------
92, 765
265, 923
Brazil-----------------------------
100,347
306
474
El Salvador
6, 000
,
12
000
Guatemala
6,000
,
17
000
Australia
--------------
,
90,000
Colombia
--------------
46,000
Ecuador--- -----------------------------------------------------------------
--------------
36,000
French West Indies------------------- ----------------
75, 000
India-------------------------------
175,000
ParaguaY---------------------------- ....................................
5,000
Total
1,200,000
3,117.195
Not authorized for purchase-------------------------------------------------
235,900
180, 000
Total subject to sec. 408(B) of act-------------------------------------
1,435, 900
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 Approved For Release 2005/04/13 : CIA-RDP64B00346R000300100004-8
17
Credit for
drawback
Charge to quota and
offset to drawback of
duty 4
of duty
Direct-con-
sumption 2
Direct-con-
sumption'
Domestic beet________________
2,009,170
------------
2,608,000
------------
1,170
------------
Mainland cane_______________
715,000
------------
760,000
0
------------
Hawaii'-----
-----------? ----
1,030,000
------------
1 044938
0
0
ico s
Puerto R_________________
980,000
1980:148
148,146
0
0
Virgin Islands________________
17,330
------------
16,184
----------
1,146
0
Republic of the Philippines---
980,000
------------
962,661
47,044
17,349
12,876
Cuba-------------------------
Other foreign countries--------
------------
371,305
------------
------------
364, 011
66, 453
-------3,220
Total quotas ------------
Subject to see. 408(b) of act---
Allocated-----------------
63,117,195
Unallocated---------------
6 180,000
Total requirements----.
Details of other foreign coun-
tries:
Peru ---------------------
121,807
801
122,692
10,800
0
0
Dominican Republic__.--
111,157
452
111, 601
9, 686
8
eg
Mexico-------------------
95,409
------------
92,850
14, 99f,
2, 559
2, 559
Nicaragua----------------
17,471
16
11,289
11, 289
8,198
347
Haiti---------------------
8,268
119
8,097
5,396
300
300
Netherlands______________
4,149
------------
4,144
4, 144
5
65
China--------------------
3,980
------------
3, 980
678
0
0
Panama------------------
3, 980
------------
3,080
3,980
0
0
Costa Rica---------------
3, 968
------------
3,973
3,973
0
0
Canada-------------------
631
------------
631
631
0
60
United Kingdom
618
------------
516
516
0
60
---------
Belgium ------------------
182
------------
182
182
0
60
British Guiana -_-___---__
84
------------
83
83
1
i
Hong Kong---------------
3
------------
3
3
Cuba---------.. -----------------------
------------
------------
------------
----
------------
Dominican Republic ------.--_
830,894
------------
830,804
------------
0
------------
Federation of the West Indies.
300,000
------------
------------
300,000
------------
4 These data include the following: (a) Domestic beet and mainland cane sugar partly estimated, (b) all
,other sugar entered or authorized as of Dec. 31, 1961.
2Includes raw sugar for direct-consumption from the Philippines 11,337, Haiti 5,306, and Hawaii 78,
total 16,811.
8 Despite deficits declared, full quotas remained available as follows: Hawaii 1,215,410 and Puerto Rico
1,270,865.
4 In addition, 202 tons of taw and 40 tons of direct-consumption sugar were brought in for subsequent
return to Puerto Rico.
6 For status see table 16.
6 Sugar bold in customs custody pending availability of quota: Belgium 1,668, Canada 503, Bong Kong 44,
Netherlands 7,372 and the United Kingdom 3,222. field for quota-exempt purposes, 9,669 from the Domin-
ican Republic.
7 Under sec. 212(1) charges to quota exclude 2 tons from Sweden, 10 tons from France, Germany, Ireland,
Poland, South Africa, and from each country listed.
6 Under sec. 212(3) 540 gallons were entered from Australia, 2,486 from France, 890 from Italy, 17,098 from
the United Kingdom, 447 from Poland, 1,949 from West Germany, and 225 from Hong Kong.
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 Approved For Release 2005/04/13 : CIA-RDP64B00346R000300100004-8
1$ SUGAR ACT AMENDMENTS OF 1962
TABLE 2(c).-Status of 1961 nonquota purchase sugar as of Dec. 31, 1961 1
[Short tons, raw value]
January-March, author-
ized for entry
Dominican Republic----------------------
Peru--------------------------------------
Me xico------------------------------------
Philippines-------------------------------
Nicaragua-------------------------------
China (Formosa)--------------------------
Brazil-------------------------------------
Federation of the West Indies and British
Guiana----------------------------------
Colombia---------------------------------
Ecuador----------------------------------
E1 Salvador------------------------------
Guatemala--------------------------------
Costa Rica----------------------- --------
Panama-------------------------- --------
Netherlands ------- ----- - - ---- -----------
Canada -----------------------------------
United Kingdom--------------------------
Haiti--------------------------------------
B elgium-----------------------------------
Hong Kong -------------------------------
French West Indies----------------------
Australia----------------------------------
Paraguay ----------------------------------
India--------------------------------------
Further
processing
Direct con-
sumption
Authorized
for purchase
Authorized
for entry
Unfilled
balance
221, 796
0
0
0
0
203,063
0
299,870
300,674
0
101,168
0
399,423
389, 792
8,631
122, 683
0
368, 048
269,930
98,218
14, 974
0
9,897
4, 604
6,203
11
503
0
543
154
154
543
20
,
11,402
0
,
295,000
,
295, 000
90
152
10
0
255
755
255
693
62
,
6, 007
0
,
40, 000
,
40, 042
0
5,989
0
30,000
30,000
0
2, 000
0
10,000
9,467
533
------------
1, 991
15,000
7,618
7,382
------------
1,161
24, ,774
24,754
20
------------
970
4,515
12,188
2,327
------------
1,450
4
388
$4
388
0
------------
1,265
,
0
,
------------
------------
--------
1
034
0
------------
------------
429
,
36,572
36,572
0
------------
357
1,092
01,092
0
6
19
all
8
75,000
75, 000
0
------------
00,000
90,055
0
6 000
3,557
1,443
175;000
170, 046
4,054
I Authorizations exclude 1st 10 tons from Brazil, Colombia, Ecuador, El Salvador, Guatemala, Australia,
French West Indies, Paraguay, and India.
1 Held in customs custody for 1962 release: Brazil 1,712 tons and China 8,899 tons.
1 All for direct consumption.
COST
As has been pointed out, the objectives of the Sugar Act have been
attained at a minimum of cost to the consumer and the taxpayer.
The program is financed by a tax of one-half cent per pound raw
value on all sugar processed in the United States and on all imported
refined sugar. This tax has offset by more than $450 million, the total
of all payments to domestic producers plus the cost incurred by the
Department of Agriculture in administering the Sugar Act. Table 3
shows the total of such collections by years since the enactment of
the Sugar Act in 1937. It is to be noted that the collections do not
include tariff duties, which amount to approximately $37.5 million
per year, but only collections from the tax above referred to. Table 4
shows the payments which have been made under the act to the
various domestic areas.
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19
Sugar tax collections 1
Sugar tax collections 1
Fiscal year
Fiscal year
Excise
Import
Total
Excise
Import
Total
tax a
tax e
tax a
tax e
1938 ----------
$30,569,1.30
$2,680,298
$33,249,428
1950----
$71,188,029
$4,091,155
$75,279,184
1939------- -_.
65,414,058
3, 494,627
68,908,685
1051 ----------
80,191,884
3,613,479
83
, 805, 363
1940-___-_-___
88,145,3.58
5,456,207
73,601,565
1952------ .-..__
78,473,191
3,621,210
82
,094,401
1941_-__-__--_
74,834,839
4,859,760
79,694,699
1953 ----------
78,129,860
5,005,959
83,135 819
1942_-___.-__-
68,229,803
4,088,963
72,318,766
1954 ----------
73,885,000
4,498,368
78,383368
1943----- -----
63,551,777
3,520,064
67;071,841
1955---- ----
78,512,000
4,177,097
82,689,097
1944 ----------
68,788,910
5,097,040
73,888,850
1056----- _----
82,894,000
4,808,321
87,700,321
1945-------- __
73,2W, 966
3,522,414
76, 816, 380
1967 ----------
-
86, 091, 000
4,305,601
90,396,501
1946 ----------
56,731,086
3,231,592
59,963,578
1958 -----
-----
85,011,000
4,957,798
90,868,798
1947 ----------
59,151,922
5,115,447
64,267,389
1959-- -------
86,378,000
5,683,187
92,061,
187
1948__________
71,246,834
3,284,502
74,531,336
1,960 ----------
89,856,000.
5,099,473
94 955,47E
,
1949----------
76,174,356
4,698,867
80,873,223
1961__________
91,818,000
42,800,000
94,
618,000
1 Imposed at a rate of 0.465 cent per pound on sugar testing 92 sugar degrees and for each additional sugar
degree 0.00875 cent per pound additional (equivalent to 0.50 and 0.535 cent per pound on sugar testing 96
and 100 sugar degrees, respectively), On sugar testing less than 92 sugar degrees the rate is 0.5144 cent per
pound of the total sugar content.
8 Collected by the Internal Revenue Service on all sugar processed or refined in the United States.
8 Collected by the Collector of Customs on direct-consumption sugar imported into the United States..
4 Estimate.
TABLE 4.-Sugar Act payments, by areas, 1987 to date 1
Crop year
Sugar beet
Mainland
cane
Hawaii
Puerto Rico
Virgin
Islands
Total
1937_______________
$17,136,867
$5,366,774
$4,174,800
$9,502,122
_
$36,169,363
1938------- _-------
22,(173,345
6,311,779
8,594,431
8,871,084
_
45, 850,630
1039_______________
21, 371,789
5,448,583
8,975,616
10, 617, 743
_
46, 413, 730
1940_______________
23,262,639
3,887,750
8,851,542
0,566,735
--------------
45,568,666
1041_______________
18,091,929
4,581,604
8,594,533
11,231,588
_
1942_______________
29,770,909
6,.965,080
8,147,404
13,122,900
$26,320
58,022,793
1943________
17,602,914
7,392,119
8,250,816
12,214,038
66,362
5,616;249
1944________
18, 632,477.
8, 646, 061
8,210,656
13, 061, 033
41,380
46, 591, 607
1945_______________
22,911,916
6,830,763
8,065,079
13,271,249
56,027
61,144,034
1946_______________
27, 735, 230
6,536,104
6,574,448
. 15, 060, 652
66,758
55, 073, 092
1947_______________
32, 259, 930
6,260,340
8,109,124
15, 492,292
43,084
62,165, 370
1948..______________
23,2206,938
7,202,756
7,628,611
17,687,677
64,;142
55,770,123
1949_______________
.28, 581, 945
7,087, 424
8,437,619
17, 531.629
69,586
50, 704,203
19,50_______________
33, 744, 012
7,826,663
8,471,294
17,148914
188,610
67, 3291393
1,951_______________
25, 899, 661
6,467,908
9,143, 041
18,928:168
97, 776
60,1536i 554
1952_______________
24,735,741
7,977,490
0,398,138
16,060,951
146,120
59,217,440
1953_______________
20,974,246
8,607,186
10,155,500
16,698,919
170,844
65,606,684
1054___________
33, 224, 656.
8,051,294
9, 932,469
16, 220, 824
127,760
67, 556, 093
1955_________
29,101,754
7,607,634
10,535,921
16,053,488
135,758
,
63,334,535
1056______
31,267,967
7,330,693
10,179,146
14,683,659
167
144.
83,648,611
1957_______
36, 355, 436
,258,246
10, 052,121
13, 516, 077
193, 311
67,375, 190
1958________
36,216,238
7,397,473
7,430,289
14,873,728
124,999
66,042,677,
1959_______
38, 906,856
7,892,8Q9
9,292,790
14, 207, 621
163,872
70, 464, 03&
1960_______________
8 40, 377, 521.
8,167, 769
9,779,433
8 15, 535, 968
124,897
72.985, 573
I Includes abandonment and deficiency payments.
2 Estimate.
An outstanding feature of the U.S. sugar program is the' price
stability it has brought to our domestic sugar market. Although
there are fluctuations, they are within a rather narrow range-reducing,
uncertainties and inventory problems for consumers. Industrial users
of sugar are not compelled to carry excessive sugar stocks as a hedge
against a sudden large price rise, nor do they fear that the value of the
working stocks they have on hand will suddenly shrink. Similarly,
the American housewife can reach for sugar on her grocer's shelf with
confidence not only that it will be there but also that the cost will
continue to be a negligible item in the family food. budget.. , Both
'
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20 SUGAR ACT AMENDMENTS OF 1962
the industrial user and the housewife know that the price of sugar in the
United States is not only stable, but it is also reasonable by any fair
standard of measurement.
This has not always been, the case, as is demonstrated by table 5,
which shows the retail price of refined sugar from 1913 until shortly
after the effective date of the 1937 Sugar Act. In June 1920, sugar
reached a price of 26.7 cents per pound, and the whole period 1913-20
was marked by steady increases in sugar prices, combined with
violent fluctuations. Fluctuations continued during the 1920's with
a generally descending trend in prices but with prices for the first 7
years substantially above a reasonable level, as compared to the general
price structure and the price of other foods. It will be noted also that
even in the depression years of the early 1930's, sugar prices did not
respond downward along with all other prices and the price of sugar
was relatively high compared both to the general price level and
consumer income.
Year
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Annual
average
1913____________
6.8
5.5
5.4
5.4
5.4
5.3
5.5
5.6
5.7
5.5
5,4
5.4
5.5
1914 ------------
5.2
5.2
5.1
5.0
5.0
5.1
5.2
7.9
8.0
7.2
6.2
6.1
5.9
1915____
6.0
6.5
6.6
6.7
6.8
6.9
7.0
6.7
6.5
6.1
6.6
6.8
6.6
1916____
6.7
6.9
7.5
8.0
8.6
8.7
8.8
&5
7.7
8.2
8.6
8.3
8.0
1917____________
8.0
8.1
8.8
9.6
10.1
9.4
9.2
10.0
9.9
9.8
9.6
9.5
9.3
1918----------- __
9.5
10.8
9.2
9.1
9.1
9.1
9.2
0.3
9.6
10.6
10.8
10.8
9.7
1919____________
10.8
10.7
10.0
10.6
10.6
10.6
10.9
11.1
11.0
11.4
12.5
14.5
11.3
1920____________
17.8
18.8
18.7
20.2
25.4
26.7
28.5
22.9
18.3
13.9
12.8
10.5
19.4
1921__._________
9.7
8.9
9.7
9.7
8.4
7.8
7.1
7.5
7.3
6.9
6.7
6.5
8.0
1922 ------------
8.2
6.4
6.5
6.7
6.6
7.1
7.6
8.1
7.9
7.9
S.1
8.3
7.3
1923____________
8.1
8.5
10.0
10.3
10.9
10.9
10.3
9.4
9.4
10.4
10.0
10.2
9.9
1924----
10.0
10.1
10.2
9.7
9.0
8.1
8.2
8.0
8.4
8.6
8.6
8.5
9.0
1925....
7. 9
7.5
7.4
7.3
7.0
6.9
6. 8
6.8
6.8
6.6
6.4
6.6
7.0
1926 ------------
6.5
6.6
6.5
6.5
6.6
6.8
6.8
6.8
6.8
7.0
7. 0
7.1
6.8
1927_._____._
7.4
7.3
7.3
7.1
7.1
7.2
7.2
7.1
7.1
7.1
7.0
7.0
7.2
1928___
7.0
7.0
7.0
7.0
7.1
7.1
7.1
6.9
6.9
8.8
6. 7
6.6
6.9
1929--------- .__
6.6
6.5
6.3
6.3
6.3
6.2
6.3
6.5
6.6
6.6
6.6
6.5
6.4
19.30 ------------
6.5
6.4
6.3
6.2
6.2
6.0
6.0
5.9
5.8
5.7
5.8
5.8
6.1
1931____________
5.8
5.8
5.7
5.6
5.5
5.4
5.5
5.6
5.6
5.5
5.5
5.4
5.6
1932 ------------
5.3
5.3
5.2
5.0
4.9
4.8
4.9
5.0
5.0
6.1
5.0
5.0
5.0
1033 ------------
6.0
4.9
5.0
5.0
5.2
5.3
5.4
5.6
5.6
5.6
5.6
5.5
5.3
1934 ------------
5.4
5.4
5.4
5.4
5.4
5.4
5.7
5.7
5.7
5.7
5.6
5.5
5.5
1935------- _----
5.4
5.4
5.4
5.4
5.6
5.7
5.8
5.8
5.8
5.8
5.9
5.8
5.7
1936__________._
5.7
6.6
5.5
5.5
5.6
5.6
5.7
5.7
5.6
5.6
5.5
5.5
5.6
1937_.__._____._
6.6
5.7
5.7
5.7
5.7
5.6
5.5
5.5
5.7
5.8
5.6
5.6
5.6
1938__
5.5
5.6
5.5
5.4
5.4
5.3
5.3
5.2
5.1
5.1
5.2
6.2
5.3
1939_____
5.2
5.1
51
.
5.1
5.1
5.2
5.2
5.2
6.4
6.2
5.8
5.6
5.4
1940-----
5.4
5.3
6
.3
5.3
5.2
5.2
5.2
5.1
5.1
5.1
5.1
5.1
5.2
Table 6 shows the price behavior of sugar since the effective date
of the 1937 Sugar Act. Prices shown here are wholesale prices for
refined sugar in New York. Column 1 shows the actual cash price
of refined sugar which increased from 4.48 cents per pound in 1938 to
9.21 cents per pound in 1961. Columns 2 and 3 show the index of
prices of all foods and of per capita disposable income, respectively,
and it will be noted that both of these categories have increased
substantially more than the price of sugar. Column 4 shows that in
comparison to the price of all foods, and of disposable income, sugar
is substantially cheaper today than it was at the start of the sugar
quota program. Related to the price of all foods, sugar was 4.82 cents
per pound in 1939 and only 4.15 cents per pound in 1961. Related to
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 Approved For Release 2005/04/13 : CIA-PQPf4A00346R0003Cff 00004-8
SUGAR 'AC'-:'AMENDMENTS TO
disposable personal income, sugar was 4.57 cents per pound in 1938
and was down to 2.38 cents per pound in 1961.
TABLE 6.-Wholesale prices of sugar (actual and adjusted), prices of all goods, per
capita disposable. income, and sugar distribution
(1)
(2)
Prices of
(3)
Per capita
able
di
(4)
Sugar prices adjusted
for change in-
(6)
Sugar distribution
Year
Sugarprice'
net cash,
Now York
all foods
(wholesale)
(index
spos
income
(index
Prices of
d
f
Per capita
ble
os
dis
Total
000 short
(1
Per capita
(cents per
pound)
numbers,
3
-
1915
numbers,
39-
1935-
s
oo
all
per
(cents
a
p
income
t
,
tons, raw
value)
(pounds,
raw value)
00
)
100)
d)
poun
s per
(cen
pound)
1938
4.48
93
98
4.82
15
5
4.57
36
4
6,643
6,868
102
105
1939______________
1940
4.58
4.33
89
90
105
112
.
4.81
.
3.87
62
3
6,891
069
8
104
1
1941______________
4.92
45
6
105
126
136
169
4.69
4.33
.
3.22
,
6
181
93
1942______________
1943______________
.
5.49
136
190
206
4.07
11
4
2.89
2.65
,335
6,335
7,147
103
1944______________
1945______________
6.46
5.39
133
134
209
.
4:02
84
3
2.68
2
87
6,041
5,621
86
80
1946______________
1947
6.34
8.12
165
206
221
230
.
3.94
4
.
3.53
03
3
7,448
343
7
103
100
______________
1948______________
7.60
81
7
222
202
251
247
2
3.
8.87
.
3.16
,
7,580
10
10
1949______________
1950--------------
.
7.84
207
286
287
3.79
64
3
2.95
2.86
8, 279
7,737
10
1051______________
8.21
45
8
232
229
296
.
3.69
2.85
2
78
8,104
10
10
10
1052 --------------
1953--------------
.
8.65
219
308
308
8.90
92
3
2.78
207
8,
10
--------------
.55
8
8.42
218
212
323
339
.
3.97
4
05
2.61
2.63
8,394
10
10
1966______________
-------
1957
8.59
8.97
8
212
218
361
.
4.11
95
8
2.56
2.58
8,734
0,030
10
10
-------
1958--------------
08
9.08
9
.
230
219
355
371
.
4.17
2.46
44
2
9,181
261
9
10
10
1960--------------
1961--------------
0
.4
223
222
379
387
4.14
4.15
.
2.38
,
9,695
10
1961 --------------
9.21
buildin
resulted
1041
e distribution
of sugar distribu ed during 1041 was actually consumed dl uringil 42vet
invisible" Su in 1 42 andla considerable amountdurin
A comparison of recent retail prices in the United States with those
in other countries points up the fairness of sugar prices to American
consumers and the effectiveness of our program under the Sugar Act.
Such a comparison of: prices is included in a study recently published
by the Food and Agriculture Organization of the United Nations in
its Monthly Bulletin of Agricultural Economics and Statistics for
January 1960. This report shows that the average retail price of
sugar in the United States-11 cents a pound in 1957, when the study
was begun-is nearly 5 cents below the median price in 121 nations
around the globe.
Measuring the retail price of sugar on the basis of wage rates, sugar
prices in the United States are the lowest in the world. Two in-
dependent studies, one by the National Industrial Conference Board
and one by the FAO, referred to above, show that an American work-
man needs to spend less time at his job than a workman in any other
nation in order to earn enough money to buy a pound of sugar. Table
7 is from the study conducted by the FAO. It shows that in 1946, a
bricklayer in the United States needed to work only 4 minutes to buy
1 kilogram (2.2 pounds) of sugar. In contrast, a kilo of sugar took
20. minutes' work in the United Kingdom,. 24 minutes in France, 34
2
9
0
3
6
1
2
6
2
4
4
3
6
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 Approl For Release 2005/04/13 : CIA-RDP64B00346R000300100004-8
SUGAR ACT AMENDMENTS OF 1962
minutes of work in the Netherlands, and 82 minutes of work in Italy.
Not shown on the table is the U.S.S.R., where it takes an estimated
324 minutes of work to buy a kilogram of sugar.
TABLE 7.-Sugar-Worktime cost of sugar and order of consumption, worktime cost
and money cost, in specified countries, 1956
M
Hourly
Retail
W ork-
time cos
C on-
t sump-
W ork-
ime cos
oney
cost
t order
wage fo
r price of
(minutes
) tlon
order
(U
S
brick-
sugar in
order I
.
.
(dollars)
layers
national
currency
United States---------------
Canada
- Doliar
-
3.65
0.233
4
53
1
38
---------------------
Sweden
-
- do--
2.26
:205
60
2
27
U
i
f
na
9.74
1.18
7
49
3
40
n
on o
South Africa __-__._
Denmark
_ Pence
88.50
11.02
8
42
4
8
-------------------
Nor
- Cre------
- 678.00
106.50
9
56
5
13
waY-
Iceland
Krone
7.20
1.18
10
51
6
17
----------------------
Australi
- -- do------
- 21.89
3.59
10
57
7
33
a--------------------
Israel
- Fence .....
113.00
20.13
11
54
8
21
-----------------------
Malta
- Prutot----
1,178.00
270.00
13
30
9
11
New C
l
d
i
Pence
22.00
5.04
13
38
10
1
a
e
on
a___________
Netherla
d
A
ti
_ Franc_____
75.00
16.00
13
45
11
41
n
s
n
lles--__-
Florin-____
1.50
40
16
36
Uruguay--------------------
New Zeal
d
- Peso--
2.15
.
56
15
40
12
13
26
10
an
----------------
l
d
Switze
- Pence-
72.20
19.47
16
52
14
3
r
an
Ireland
Franc -----
3.17
.94
18
47
15
5
34
____________ ----------
British
Pence -----
51.50
15.43
18
48
16
1
_
United Kin
d
Cent______
49.00
16.53
20
43
17
6
3
g
om__
_
Chile
Shilling-
- -
4.29
1.43
20
55
18
28
--------------
----------
Argentina
Peso
-
120.00
43.60
22
29
19
2
-------------------
F --------------------------
Fiji
do 2 -?
Franc 2- -
10.ik1
252.00
4.00
100.60
24
24
33
26
20
21
6
46
------------- ------------
Belgium
Pence-----
23.00
98.92
26
35
22
5
---------------------
Cyprus
Franc -----
23.58
10.85
27
28
23
30
----------------------
Trinidad
Piaster ----
28.30
13.04
28
21
24
23
??-----_-
Mala
a
:
-:::
":::::
Cent 2-----
44.00
21.40
29
37
25
y
-
-
-
German
W
t
do-------
113.00
58.00
31
25
26
7
22
y,
es
--------------
Morocco
Mark_.___
2.31
1.24
32
27
27
4
---------------------
Jamaica
Franc -----
175.00
94.00
32
34
28
7
4
----------------------
Netherland
Shilling 2--
2.41
1.33
33
31
29
3
1
s ------------------
Finland ---------------------
Grenada
Florin-----
Markka___
1.37
164.00
. 78
100.40
34
37
46
44
30
31
9
24
57
---------------------
Lebanon
Cent------
50.00
32.00
38
32
32
---------------------
Guatemala
Piaster____
100.00
65.00
29
18
33
20
2
_______________
Mauritiu
Centavo_-
25.00
17.40
42
23
34
9
s --------------------
Tunisia
Cent ......
66.00
46.00
42
41
35
15
4
______________________
Austria
Franc ___--
116.20
92.00
47
20
36
42
--------------------- -
Taiwan ----------------------
Hong Kong
Schilling_-
Dollar_____
7.45
5.50
5.96
4.60
48
49
39
12
37
38
36
25
---------------
French West Af
i
- do_-----
1.10
.97
53
24
39
14
r
ca--_-_-____
SPain
Franc __---
59.40
53.50
54
9
40
48
--------------------- --
Portugal
Peseta----
12.00
11.00
55
13
41
45
---------------------
Lucia Lucia
Escudo ----
5.44
5.30
68
16
42
---------------------
Paraguay
Cent ------
27.50
26.50
58
22
43
18
12
-------------- ------
Nigeria
Guarani __-
13.80
14.00
60
15
44
9
-----------------------
Sierra Leone
Pence -----
18.00
18. 74
tit
1
45
3
-----------------
Japan-----------------------
Italy-----------------
--
-
Vietnam
---do--__.__
Yen 8
Lire. _.__-_
18.30
125.00
193.00
19.86
137.33
263.00
65
66
82
6
14
17
46
47
48
1
37
52
5
_______________
_
Madagascar-, ----------------
Cameroons (French adman- _
Piaster----
Franc_.__-
-do__
9.87
41.00
38
00
14.50
60.00
60
00
88
88
5
7
49
50
5
54
51
istration).
.
.
95
2
51
50
Belgian Congo--------------
P
ki
do
6.60
11.00
100
a
stan---------------------
G
Rupee 2 -
69
1.21
105
reece-----------
F
h
Drachma _
6.42
11.56
108
renc
Equatorial Africa---_
Th
i
Franc.....
35.00
74.00
127
a
land_____________________
C
l
Baht__
2.15
4.63
129
ey
on---
Rupee +---
.67
1.48
156
I Including noncentrifugal sugar at 60 percent of the actual weight for Malaya, Guatemala, Taiwan,
Japan, Vietnam, Pakistan, and Thailand.
f Carpenters.
e Transport drivers.
4 The relation of bricklayers' wages to other wages in Ceylon seems to be different from those In almost
all other countries; this makes the data questionable.
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 Approved For Release ,&9 sRgp6M90346R00030(W0004-8
SUGAR C
THE WORLD MARKET AND WORLD PRICE OF SUGAR
With the recent interest that has focused on the Sugar Act, there is
an awareness that the domestic raw cane sugar price has normally been
much higher than the so-called world market price forthat commodity.
Actually the terms "world price" and "world market" do not relate to
a r0(' or to market conditions typically prevailing throughout most of
the world. On the contrary, these terms relate to the price and condi-
tions under which residual quantities of sugar are traded. Only about
17 percent of the world's sugar production is traded on the "world
market" and since this is essentially "surplus" or "homeless" sugar, it
does not establish a true world price nor reflect the actual value of
sugar.
World consumption of sugar now amounts to about 57.5 million
tons a year. Of this amount, about 40 million tons are consumed in
the countries where it is produced. In nearly all instances, as in the
United States, because'of the essentiality of the product, it is produced
under some kind of national control, bounty, or subsidy system.
This leaves about 17.5' million tons to be consumed outside the coun-
tries of production. Published world sugar trade statistics show ex-
ports to be 19 million tons, but these figures include substantial
reexports of sugar previously imported into several European countries
for refining Of the 17.5 million tons moving outside the countries
or areas where produced, some 8 million tons move from French and
Portuguese oversea areas to the mother countries, or they are traded
under the preferential terms and provisions of the Commonwealth
Sugar Agreement and the U.S. sugar program. This leaves not quite
10 million tons for trading in the so-called world market. Roughly
half of that total is Cuban sugar exported to Communist bloc countries
for barter at a negotiated nominal price.
Thus, the world free market, exclusive of Cuban bartering with the
bloc, is a 5-million-tqn residual. Since world production usually
tends to exceed world! consumption,; the world market is normally a
very depressed market. However, because of the very character of
this so-called world market, it is an extremely volatile market reacting
sharply to international tensions or to changes in supply and demand.
For example, during the disturbed situation brought on by the Suez
crisis and the events in Hungary 5 years ago, the price on this market
nearly doubled in 60 days. Throughout the latter half of 1950 and
almost all of 1951, this so-called world price was higher than the price
of sugar destined for the United States, reaching a differential above
the U.S. price of 1.85 cents per pound in June 1951. A similar situa-
tion prevailed in the 1957 period above referred to when the world
price went from $2.07 per hundred pounds below the U.S. price in
October 1956 to $1.34 above the U.S. price in April 1957.
The assumption, therefore, that the United States could import
a large part of its sugar requirements at the present, very low world
market price is not necessarily valid. Since we would not buy from
an unfriendly Cuban regime with which we maintain no diplomatic
relations, the supply of foreign sugar available to us would be limited
not only under our own program, whatever exact form that would take,
but also by the actually available supply. In other words, there
would be a realinement of markets and the combination of the non
bloc world?market with the U.S. import market might result in a price
level'higher than the present world market price.
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 Appro d For Release 2005/04/13 : CIA-RDP64B00346R000300100004-8
SUGAR ACT AMENDMENTS OF 1962
The excess of world sugar production in most recent years has
resulted in generally increasing world inventories with substantial
interruptions due to special demand situations, described above, and
crop reverses in major producing areas. The changes in inventories
are large, indeed, in relation to the restricted "world market" demand
and their effect on "world" prices is correspondingly acute. Table 8
indicates the level and fluctuations in world inventories.
TABLE 8.-Centrifugal sugar (raw value): Stocks beginning of new grind, in 40
selected countries, average 1950-51 through 1954-55, annual 1955-56 through
1960-61
[Thousand short tons]
I All stock carryover dates, except for Jan. 1, apply to the 1st year mentioned at the head of each column.
2 Preliminary.
3 2-year average, 1953-54, 1954-55.
4 Sept. 1.
a Jan. 1.
9 4-year average, 1951 through 1954.
v Feb. 1.
9 3-year average, 1951 through 1953.
9 Nov. 1.
10 Includes estimates for all countries shown in years when stocks are not reported.
NOTE.-Foreign Agricultural Service. Prepared or estimated on the basis of official statistics of foreign
governments, other foreign sources materials, reports of U.S. agricultural attachts and Foreign Service
officers, results of office research, and related information.
Sugarmaking season
County
Date 1
Average,
1950-51
through
1955-56
1956-57
1957-58
1958-59
1959-60
1960--612
1054-55
Argentina_______________________
Indonesia____
May 1
do
382
3
219
107
62
24
163
356
____________________
-
___
_
______
::-
Fiji
-----
-____
___
June 1
19
207
39
255
29
180
25
441
22
424
88
622
61
670
---------------------
-
-
--
-
-
Mauritius----------------------------
--
- -- -do do -__-_-
2
1 3
b 3
2
3
26
65
araguay------------------------
_
_
--- do-----
_
----------
4
0
4
0
1
7
--------
Union of South Africa___________
Australia
do..__-
43
46
50
34
4
74
12
116
6
60
British __________________
Guiana______________
July 1
Aug. 1
130
136
163
195
157
179
211
Finland
Itai _________________-'-"'""
y
-do
'
g
3
5
38
6
16
46
4
79
4
b5
----------------------------
Canada
Hu ___________________
n
---do
Seppt. 1
138
58
08
56
566
82
257
76
105
62
252
89
700
66
gary________________________
United Kingdom
___do-----
do
41
94
26
28
28
-----
----------------
Venezuela --------------------
__
.__._
do
846
20
917
651
629
606
479
618
---
Belgium ___________________......
-----
---
Oct. 1
42
23
21
101
24
117
58
57
66
Costa Rica----------------------
---do-----
7
6
15
9
24
40
21
Denmark.------.---
France
---do-----
24
16
21
25
14
33
21
127
11
74
__________________________
Germany, West_________________
___do_____
___do-----
110
147
225
174
103
187
78
2
88
147
203
Ireland--------------------------
---do-----
4 28
4 49
4 37
75
187
693
363
Japan
do
32
3 28
124
17
150
35
149
32
136
Phil' 1
__________
S
de
-----
___do-----
65
46
24
173
34
148
89
82
78
98
161
274
69
we
United States and insular areas--
Dominican Republic
___do_____
N
_
1,597
1,338
1.183
1,183
1, 648
312
1
275
------------
El
Salvador--------
ov. 1
do
53
103
158
20
93
231
,
226
-------------
Guatemala-------------
---
-----
do
------ ----
9
8
6
2
2
1
---------
India____________________________
Mexico
---
----
___do-----
d
"246
689
9
663
13
550
13
397
6
169
540
Taiwan
_"____
___
_
______________
-
o-----
___do-----
165
59
347
71
150
176
295
336
503
553
British East fr
A
ic
a
Jan. 1
910
10
25
116
27
83
2
155
60
Cuba____________________________
Federation of West Indies
___do-----
do
1,357
1.786
703
750
0
603
23
1,347
18
1,209
------- -
Haiti---------------------------- -
-_
-----
--do-----
__________
2
78
5
8
3
6
15
19
51
Nicaragua----------------------- -
--do-----
3
3
1
3
8
1
Panama------------------------- -
--do-----
2
-
------
4
8
Peru_______________________
Thailand---------
__do-----
d
101
3
87
143
95
128
106 2
84
--------------- -
--
o-----
33
9
20
13
921
910
924
Total 1D____________________ _
_________
6.440
7,700
6,128
5,806
5,213
8,063
8.272
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 Approved For Release 2005/04/13 : CIA-RDP64B00346R000300100004-8
STJGAR ACT AMENDMENTS OF 1962 25
THE 'QUOTA PREMIUM"
The difference between the so-called world price and the U.S. price
has on occasions been called the quota premium, or more popularly
the subsidy in our sugar program. This approach is carried even
further to say that the amount of protection or subsidy involved in
the American sugar program is the amount of the difference between
the two prices, multiplied by the amount of sugar purchased. This
is an exaggerated statement of the protection afforded by the Sugar
Act and is such an oversimplification of a basically complicated eco-
nomic situation as to be misleading. It is obvious that the amount
of the quota premium is not accurately measured by the difference
between the U.S. price and the so-called world price with the Sugar
Act in effect. The amount of the quota premium could more nearly
be measured by calculating the difference between the price received
by supplying areas now shipping to us under our quota program and
the price they would receive in sales to us if we had no quota program.
Even under the orderly marketing situation brought about by our
Sugar Act, the so-called quota premium has not been a one-way
street. Through mid-1960, Cuba was the principal foreign benefi-
ciary of the "quota premium" and, in turn, during that period the
supplies needed from Cuba were made available without interruption.
Table 9 shows this relationship on a yearly average basis from 1934
through 1947. Table 10 shows the same relationship, in slightly
different form, by months for the years 1948-61.
During the war and immediate postwar years of the 1940's, the
United States purchased virtually the entire Cuban sugar production.
As is indicated by the last column on table 9, we obtained this sugar
(and also the sugar purchased from domestic producing areas) at
substantially less than the world price. Table 10 shows the months
during the Korean conflict and during the Suez incident when the
world price was higher than the U.S. price.
TABLE 9.-Quota premiums and discounts: Comparison of Cuban price, per pound,
of sugar for shipment to United States and world market, annual average, 1934-47
[Cents]
U.S. price
Freight and
insurance
Price for shipment to-
Difference,
U.S. price
Year and month
c.i.f. basis
,
Cuba to
from world
New York
Now York
United
World
price
States
market
-------------------
----
1934
-
1.50
0.13
1.37
0.01
0.46
--
--
-
___________________________
1935_
2.33
.12
2.21
.88
1.33
_
1936-----------------------------
2.69
.13
2.56
.88
1.68
------------------------
1937
-
2.54
.19
2.35
1.13
1.22
--
--
-------------------------
1938---
2.04
.14
1.90
1.00
.90
-
1939-----------------------------
1.91
.17
1.74
1.43
.31
1940-----------------------------
1.89
.22
1.67
1.11
.56
1941_____________________________
2.48
.39
2.09
1.46
.63
----------------------
-
1942
2.99
.51
2.48
2.69
-.21
----
---
1043-----------------------------
2.09
.53
2.46
2.69
-.23
1944-----------------------------
2.99
.40
2.59
2.69
-.10
----------------------
1945-
-
3.00
.35
2.65
3.14
-.45
----
-
---------------------------
1946-
3.86
.44
3.42
4.24
-.82
-
1947-----------------------------
5.46
.49
4.97
5.03
-.08
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i
 Approved For Release 2005/04/13 : CIA-RDP64BOO346ROO0300100004-8
26
TABLE 10.-Quota premiums and discounts-Comparison of price of raw sugar for
shipment to the United States and to world markets
FOR SHIPMENT TO UNITED STATES i
[Cents per pound]
Year
San.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct,
Nov.
Dec.
Monthly
average
1948_____
4.68
4.57
4.50
4,45
4.25
4.44
4.79
4.87
4.78
4,77
4.80
4.75
4.64
1949_____
4.78
4.72
4.77
4.73
4.89
4.97
4.96
5.05
5.20
5.21
6.12
4.94
4,94
1950____________
4.91
4.76
4.70
4.68
4.87
4.95
5.22
5.39
5.40
5.41
5.36
5.39
5.09
1951________
5.12
4.95
4.92
4.86
5.38
5.56
5.29
5.03
5.02
4.94
4.98
4.78
5.07
1952____________
4.82
4.70
6.18
5.33
5.29
5.53
6.61
5.68
5.67
5.72
5.55
5.17
5.35
1953____________
5.19
5.31
6.45
5, 45
5.46
5.52
5.56
5.55
5. 59
5.57
6.29
6.15
5.43
1954____________
5.15
5.18
5.29
5.28
5.22
5.28
5.32
5.23
5.14
5.11
6.25
6.02
6.21
1055____________
5.01
5.00
4.91
4.91
5.04
6.10
5.08
5.06
6.02
5.03
4.94
4.87
5.00
1956____________
4.93
4.94
5.01
5.01
5.01
5.01
5.10
5.10
5.11
5.31
5.34
5.34
5.10
1957____________
5.31
5.07
5.15
6.12
5.41
6.59
6.52
5.24
5.30
6.36
5.27
5.30
5.30
1958____________
5.31
5.31
5.18
5.35
5.41
5.41
5.43
5.42
5.62
5.59
5.46
5.55
5.41
1959____________
5.27
5.13
4.97
5.01
5.38
5.41
5.41
5.61
5.65
6.68
5.53
5.23
5.35
1960____________
4.95
5.06
6.14
5.20
5.14
6.31
5.54
5.53
5.65
5.58
5.60
5.52
5.35
1961____________
b. 47
5.42
5.37
5.34
5.53
5.53
5.43
5.09
5.10
5.23
5.33
6.44
6.36
FOR SHIPMENT
TO WORLD 2
1948____________
3.06
4.24
4.26
4.43
4.27
4.06
4.10
4.41
4.39
4.32
4.27
4.03
4.23
1949____________
4.00
3.95
4.17
4.09
4.04
4.08
4.13
4.20
4.19
4.33
4.33
4.39
4.16
1950____________
4.62
4.47
4.44
4.37
4.21
4.21
4.89
5.83
5.88
5.84
5.68
5.36
4.98
1951____________
6.22
4.96
5.48
6.57
6.62
7.41
6.75
5.61
5.52
5.28
4.83
4.84
5.67
1952____________
4.54
4.38
4.30
4.30
4.24
4.17
4.16
4.05
4.00
4.01
4.00
3.84
4.17
1953____________
8.55
3.52
3.27
3.38
3.65
3.62
3.60
3.53
3.29
3.15
3.10
3.27
3.41
1964____________
3.30
3.39
3.28
3.36
3.32
3.27
3.13
3.18
3.21
3.25
3.26
3.19
3.26
1955____________
3.17
3.17
3.22
3.31
3.38
3.26
3,22
3.22
3.27
3.28
3.19
3.16
3.24
1066
3.26
3.28
3.34
3.31
3.36
3.36
3.40
3.34
3.24
3.24
3.92
4.77
3.48
1957
5.83
6.80
6.17
6.46
6.02
6.12
5.27
4.13
4.55
4.03
3.63
3.87
5.16
1958_
3.74
3.65
3.42
3.45
3.47
3.42
3.50
3.46
3.48
3.41
3.42
3.84
3.50
3.27
3.11
3.05
2.88
2.94
2.81
2.66
2.78
3.09
3.10
2.96
3.00
2.97
1080____________
2.97
3.02
3.05
3.04
3.05
2.97
3.26
3.31
3.25
3.26
3.25
8.25
3.14
1961____________
3.03
2.97
2.97
3.14
3.35
3.20
3.05
2.80
2.69
2,73
2.63
2.46
2.91
1948____________
+0.72
+0.33
+0.24
+0.02
-0,02
+0.38
+0.69
+0.46
+0.39
+0.45
+0,53
+0.72
+0.41
1940____________
+.78
+.77
+,60
+,84
+.85
+.89
+.83
+.85
+1.01
+.88
+.70
+.55
-1-.78
1950____________
+.20
+.28
+.20
+,31
+, 66
+.74
+.33
-.44
-.48
-.43
-.20
+.03
+. 11
1951____________
-.10
-.01
-.50
-.71
-1.24
-1.85
-1. 46
-. 58
-. 50
-.34
+.15
-.06
-.68
1952____________
+.28
+.41
+.88
+1.03
+1.05
+1.36
+1.45
+1.53
+1.67
+f.71
+1.56
+1.33
+1.18
1953____________
+1. 64
+1.79
+2.18
+2.07
+1.81
+1.90
+1.96
+2.02
+2.30
+2.42
+2.19
+1.88
+2.02
1954____________
+1.85
+1.70
+2.01
+1.92
+1.90
+2.01
+2.19
+2.05
+1.93
+1.86
+1.99
+1.83
+1.95
1955____________
+1.84
+1.83
+1.69
+1.60
+1.66
+1.84
+1.86
+1.84
+1.75
+1.75
+1.75
+1.71
+1.76
1956____________
+1.87
+1.66
+1.67
+1.70
+1.65
+1.65
+1.70
+1.76
+1.87
+2.07
+1.42
+. 57
+1.62
1957____________
-. 52
-.73
-102
.
-1.34
-.61
-.53
+.25
+1.11
+.75
+1.33
+1.64
+1.43
+.14
1958____________
+1.57
+1.76
+1
.70
+1.90
+1.94
+1.99
+1.03
+1.06
+2.04
+2.18
+2.04
+1.91
+1.91
1960
+2.00
+1
96
2.02
2
04
+1.92
+2
09
+2.13
2
16
+2.44
2
09
+2.60
2
34
+2.75
2
+2.73
+2.56
+2.58
+2.57
+2.23
+2.38
19
.
+2. 44
+
.
+2.45
.
+2.40 401
+
.
+2
+
.
+2.18
+
.
+2. 33
+2.
8
+2. 38
+2.22
+2.29
+2.40
+2.41
+2.33
+2. 50
+2.35
+2.80
+2.27
+2.98
+2.21
+2.45
S Prices for 1948-60 represent spot prices for sugar in bags under contract No. 6 rolled back to Cuba (minus
freight and insurance). Prices for 1961 are spot prices for sugar in bulk under contract No. 7 minus duty
(0.625 cent)), computed freight, insurance, and unloading charges, and with the bag allowance of 0.04 cent
added.
i Spot prices for 1948-60 were spot prices for bagged sugar f.a.s. Cuba, contract No. 4. Prices for 1961
are spot pricesunder No. 8 contract which is also for bagged sugar but f.o.b. and stowed at Greater Caribbean
ports (including Brazil).
8 Differences between prices for shipment to United States and for shipment to world.
Table 11 shows the details of the manner in which the Sugar Act
has achieved one of its three basic objectives--that of assuring, as a
matter of national security, the production of a substantial portion of
our sugar requirements in domestic areas. This table shows, by
areas, for the years 1955 through 1959 the acreage, production, and
deliveries of sugar, the extent to which the various areas have filled
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 Approved For Release 2005/04/13 : CIA-RDP64B00346R000300tQp004-8
SUGAR ACT AMENDMENTS OF 1962 27
their assigned quotas, and the rate of Sugar Act payments to producers
in those areas.
TABLE 11, Selected data for domestic sugar producing areas, on acreage, produc-
tion,, quotas and payments, 1955-61
[All tons are raw value]
Domestic area and
Acreage
box-
d
t
Yields of
sugar
er acre
Produc-
tion of
Quota
charges
Unfilled quota
San. 1
effective
Rate of
Sugar Act
payments
crop year
ves
e
for
sugar I
p
har-
vested
sugar
Basic
i
Adjusted
nventory
per ton
of sugar
Sugar beet:
1,000 tons
744
Tons
33
2
1,000 tons
730
1
Tons
327
1
797
Tons
2,673
Tons
2,673
1,000 tons
1,628
$16.82
1955-------------
1056_____________
789
882
.
2.50
51
2
,
1,971
213
2
,
,
1,955,252
065,687
2
0
0
149
6,007
1,547
1,529
15.87
16.43
1957-------------
1958-------------
895
898
.
2.47
56
2
,
2,214
303
2
,
2,239,852
241,184
2
0
0
62,636
26,601
1,669
1,638
16.36
116.89
1959-------------
1960_------------
962
.
2.67
,
2,474
,
2,164,692
102,609
0
350,263
170
1
1,698
005
2
16.32
47
j16
1961 (estimated).
1,090
2.26
2.458
2,608,000
,
,
.
Mainland sugarcane:
1955
267
2.14
572
498,797
1,203
1,203
396
13.30
-------------
1956_____________
233
259
2.39
06
2
557
531
601,369
636,685
0
0
327
1,487
465
346
13.16
13.67
1957-------------
1958-------------
254
.
2.28
2
08
678
615
680,552
595
677
0
51
204
40,253
120,188
244
140
12.80
12.83
1969-------------
1960_____________
296
304
.
2.07
630
,
619,047
,
78,623
154,826
0
177
185
12.97
13
14
1961 (estimated)
331
2.54
840
750,000
0
.
Puerto Rico:
1954-55__:-_----_
381
3.23
21,186
1,079,562
438
438
9
163
138
13.91
13
85
1955-50 ----------
353
362
3.26
73
2
11,162
990
1,134,769
912,571
5,484
224,416
6,82
7,429
44
.
14.83
1956-57_____.___
1957-58_.._------_
328
344
.
2.86
16
3
934
1
087
823,034
863
957
343,341
645
234
0
12,022
6
7
14.47
13.68
1958-59 ----------
1969-60 ----------
328
.
3.11
,
1,019
,
895,784
,
427,327
0
12
13.94
1960-61 (esti-
mated)---.----
340
3.26
1,110
980,000
290,865
0
24
14.00
Hawaii:
1055-------------
106
10.75
1,140
1,052,004
0
0
23
6
49
9.24
9
25
1956-------------
1057
107
107
10.28
10.14
1,100
1,086
1,091,282
1,036,763
0
50,610
23,237
14
.
9.26
________
1958____
84
-
9.11
86
8
765
975
630,175
845
970
484,304
163
617
69,825
1,125
18
114
0.71
9.53
1959-------------
1960-------------
110
104
.
9.00
936
,
844,788
,
420,587
05,656
0
78
122
9.38
9.3
2
1961 (estimated)-
d
i
I
l
110
9.93
1,092
1,045,000
170,410
32
an
n
s
Virg
s: 1965
-------
5
2.14
10
9,942
2,058
568
13
27
------
1958-------------
5
6
2.69
3.05
13
15
12,535
14,753
0
796
0
0
----
-
.
12.97
1957-------------
1958_____________
4
1.36
98
2
8
12
6,093
12
302
9,812
3,950
7
103
---
__-
12.80
13.08
1959-------------
1060_
4
4
.
1.67
7
17
,
6,954
16
184
11,089
1
146
1,664
1
146
---
__-
17.92
13.07
1961 (estimated) _
5
3.68
,
,
,
All domestic areas:
1955-------------
1,483
3.11
4,618
4,437,832
6,368
6,368
203
6
2,193
199
2
13.77
13.54
1056 -------------
7
1,487
1
615
3.22
2.99
4,793
4,834
4,796,207
4,665,459
6,293
122,291
,
37,160
,
1,933
14.18
-------------
105
1958-------------
,
1,565
62
2.87
02
3
4,497
992
4
4,379,706
769
4
765
531,704
255,741
154,687
159,939
1,937
1,892
14.38
14.25
1959____________
1960___
_ 1,6
1,702
.
2.98
,
5,066
,
,
4,531,265
1,040,235
000,235
0
1,963
338
2
14.14
14.04
1961 (estimated)
- 1.876
2.94
5,617
5,399,184
0
,
I National acreage allocations in years when production was restricted, with acreages planted in paren-
theses were as follows: Domestic beet sugar area-1955, 850 (793); 1956, 860 (823); 1957, 950 (012); 1968, 935
(927)1959, 925 (921);1960, 985 (960); mainland cane sugar area (for sugar and send)-1955, 299 (286);1956, 259
(2' )Ind157 29 (24); 158, 292 ividual farm proportionate) share established in hundredweight of sugar totaled 1,214,000 tons for
1954-55 crop and 1,222,000 tons for 1955-56 crop.
The Department of Agriculture, which administers the Sugar Act,
has prepared and revised from time to time an excellent description
and analysis of the U.S. sugar program from the earliest efforts toward
such a program up to the present time. It explains in detail the
provisions and the operations of the Sugar Act of 1948, as amended.
Most of the following discussion is from that document. Briefer
discussions of the sugar program are available in the November 1961
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28 SUGAR ACT AMENDMENTS OF 1962
issue of "Sugar Reports" issued by the Department of Agriculture
and as a separate leaflet of the Agricultural Stabilization and
Conservation Service of the Department (BI-No. 19, December
1961).
THE SUPPLY AND DISTRIBUTION SYSTEM
Since the end of sugar rationing in the fall of 1947, sugar deliveries
for consumption in the continental United States have tended to
increase with the population growth and to be stable on a per capita
basis. While annual per capita deliveries fluctuated from 94 to 102
pounds of refined sugar in response to such extraneous factors as
the Korean conflict and the Hungarian and Suez crises, the 3-year
moving average rate of annual deliveries fluctuated only between 96
and 97 pounds.
Total annual distribution averaged about 8.9 million short tons,
raw value,' during the latest 3-year cycle; this is equal to about 8.3
million tons of refined sugar. The domestic areas, in total, have been
accorded the right to supply approximately 53 percent of the require-
ments of the continental United States. Until 1960 Cuba furnished
about one-third of our needs and the Philippines about 11 percent.
About 3 percent is imported from other foreign countries. More than
half of the domestically produced sugar is supplied by the mainland
cane and beet areas. The remainder comes from Hawaii, Puerto
Rico, and a small fraction from the Virgin Islands.
Our supply areas are sufficiently scattered to assure, in the aggre-
gate, a dependable source of supply. There is seldom a year when
drought or other natural disaster causes serious crop damage in more
than one or two of these areas. This wide dispersion of our sources
of supply would also be a protection in case of war.
In the continental United States, sugar beets are produced in 22
Western and North Central States. The most important beet pro-
ducing States are California, Colorado, and Idaho. Sugarcane is
grown in a number of Southeastern and South Central States, but only
Louisiana and Florida produce cane for the manufacture of sugar.
Cane produced elsewhere is used to make sugarcane sirup.
Most sugar from cane goes through two stages of processing to
produce the refined sugar commonly used in American households.
The first process, that of extracting, boiling, and otherwise processing
the cane .juice, is conducted in the producing area in raw canesugar
mills. The products obtained are raw sugar, usually in crystalline
form and various byproducts such as blackstrap molasses and bagasse.
Raw sugar and blackstrap molasses can be used directly without
further refining-raw sugar for curing tobacco, for instance, and
molasses for cattle feed and the manufacture of ethyl alcohol, yeast,
vinegar, and citric acid. Bagasse, the fibrous portion of cane, is
used principally as fuel in the cane mills and as raw material in the
manufacture of building board, cardboard, and paper.
Most of the cane sugar brought to the mainland from offshore
areas, both foreign and domestic, is in the raw form. It is put through
the second process-the refining process-in refineries, most of which
are located in large port cities. A few refineries, however, are located
in producing areas and some are located at interior points of con-
e "Raw value" is the term used in the Sugar Act for expressing in a common unit the various types of raw
and refined sugars that move in commerce. One tone of refined sugar equals 1.07 tons of sugar, raw value.
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SUGAR ACT AMENDMENTS OF 1962
29
sumption. Refined sugars, refiners' sirups, and refiners' blackstrap
molasses result from this second process.
In contrast to cane sugar, refined sugar from beets is processed in
a single plant. The principal byproducts are beet molasses and beet
pulp. The pulp is used for cattle feed. Beet molasses, like black-
strap, is used as an ingredient in cattle feed, and in the manufacture
of yeast and citric acid. A substantial quantity of beet molasses is
put through the Steffen's process for additional extraction of sugar.
The resultant Steffen's waste is used to produce monosodium gluta-
mate, a condiment.
In the domestic areas, 64 beet sugar factories, 108 cane sugar mills,
and 33 refineries were in operation in 1958; 13 of the latter were oper-
ated as part of or in connection with cane sugar mills. These estab-
lishments represent an investment in land, plant, and equipment of
approximately two-thirds of a billion dollars. Approximately 63,000
workers are employed in the plants.
About 45,000 domestic farms grow cane or beets. About 220,000
ffarmworkers are required, mostly on a seasonal basis, to cultivate and
harvest the cane and beets. During the early years of this decade,
about 300,000 farmworkers were required.
OUR NATIONAL SUGAR POLICY, ITS HISTORY AND DEVELOPMENT
Since the passage of the first Sugar Act in 1934, the sugar policy of
the United States has been to maintain a healthy domestic industry
of limited size; to promote our general export trade; and to assure
adequate sugar supplies to consumers at reasonable and stable prices.
This policy did not take shape overnight but emerged after 145 years
of congressional decisions and actions affecting the course of the sugar
industry.
Tariff for revenue, 1 789 to 1890
The foundation of the present-day U.S. sugar program was laid
down shortly after this country gained its independence. In 1789 the
new Nation, seeking means of supporting its Government, imposed the
first tariff on raw sugar,2 to help raise revenue. At that time and
through most of the next century, import duties and domestic ex,i-e
taxes were the major source of Government receipts. The sugar
"tariff for revenue" yielded close to 20 percent of all import duties.
This duty remained on sugar continuously until 1890, holding at
about 2.5 cents a pound during most of the period but ranging from 1
to 3.5 cents.
Although the purpose of the first sugar tariff was to produce money
for the Treasury, it also provided considerable market protection to
sugarcane growers in Louisiana after that area became a U.S. territory
in 1803. The Louisiana industry had reached significant size by
1830. Later, the same protection was granted to Hawaii under the
terms of the Reciprocal Treaty of 1876 between the United States and
the Kingdom of Hawaii. Under that treaty, Hawaiian sugar was
admitted duty free. With this market advantage, and a climate
ideally suited to growing sugarcane, Hawaii rapidly expanded sugar
production. By the 1890's the production of sugar had become
2 The tars fY discussion is confined to the tariff on raw sugar, since most of the sugar imported is in raw form.
Generally, refined sugar tariffs have been higher than raw sugar tariffs.
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30 SUGAR ACT AMENDMENTS OF 1962
Hawaii's most important industry dependent principally on market
outlets in this country for its prosperity.
The sugar bounty, 1890-94
In 1890, with a surplus in the Treasury, the need to maintain a raw
sugar tariff to produce revenue was no longer pressing and the duty,
then 2.25 cents a pound, was repealed. The placing of raw sugar
on the free list reduced the cost of sugar to consumers but removed
tariff protection to domestic producers. Protection, however, was
continued in the form of a 2-cent bounty on each pound of sugar
domestically produced.
Removal of the tariff and the inauguration of the bounty had an
important effect in two producing areas-Hawaii and Cuba. Pro-
duction in Cuba was stimulated when removal of the tariff further
opened the U.S. market. On the other hand, Hawaii was hurt
badly, since it lost its preferred position in the American market
when the sugar duty was repealed. The price of Hawaiian sugar
fell sharply. Hawaiian sugar producers did not receive the bounty.
General unrest followed leading to revolt against the monarchy of
Queen Eiliuokalani in 1893 and the establis,Kment of the Republic
of Hawaii in 1894.
Tariff for protection, 1894 to 1984
In 1894, the bounty system was discontinued and a new tariff levied
on sugar. However, the primary purpose of the new tariff was not to
produce revenue as was formerly the case but to protect the domestic
industry which had reached significant size under the first tariff and
the bounty. An additional motive was to return Hawaii to its pre-
ferred status in our market.
The second sugar tariff program remained in force from 1894 to
1934. The history of the sugar industry during that period is a
a sequence of stable earnings, wild prosperity, severe but short-lived
depression, temporary recovery, and prolonged depression, in that
order.
As a result of the Spanish-American War, three potentially heavy
sugar-producing areas were added to the areas receiving protection
in our market. Free trade was extended to our new possessions,
Puerto Rico and the Philippine ,Islands, and a preferred status was
granted to Cuba. Puerto Rico received free trade status in 1901.
Tariff aid was given more gradually to the Philippines, but by 1913
Philippine sugar was granted unlimited free entry. Cuba was granted
a 20-percent tariff preferential under the Convention of Commercial
Reciprocity of 1902.
Production expanded rapidly in these areas with the granting of
protection. Cuba and Puerto Rico, like Hawaii, became specialized
one-crop areas directly dependent upon the continuation of our pro-
tective policy for the livelihood of their people. Sugar also became
a mainstay of the Philippine economy, but the industry never reached
as dominant a position there as it did in the other areas.
Our beet industry, which got its start under the "tariff for revenue"
and the bounty system, also flourished with tariff protection. By
the time of World War I, the beet area was supplying almost one-
fifth of the sugar marketed in this country.
At the turn of the century slightly more than half of our sugar
came from foreign countries other than Cuba. But by 1913 the
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increase in sugar. supplied in the continental United States, in our
territories, and in Cuba had pushed practically all other foreign
sugar from our market.
In World War I, the Government placed rigid controls on sugar
distribution and on prices of refined sugar. In addition, a price
guarantee was placed on Cuban sugar and domestic sugarbeets to
encourage production. The beet area responded to wartime price
incentives only to maintain production; but Cuba, where sugar offered
the principal means of participating in wartime expansion, greatly
increased its production.
After World War I, with the lifting of controls and the prospect
of short supplies, sugar became one of the speculative leaders in the
worldwide inflationary boom of 1920. The world price of raw sugar
reached a monthly average peak of more than 19 cents a pound in
May 1920. The bubble soon burst and the price of world sugar
dropped to an average of less than 5 cents a pound in December
1920. The depression in world sugar lasted through most of 1922.
Toward the end of the year, however, sugar prices began to advance
and by 1923 reached a second, but much lower postwar peak of
slightly more than 6.5 cents.,a pound and ranged between 5 and 6
cents a pound for more than a year.
Many believed that the sugar industry, both in this country, and
generally throughout the world, had recovered its prewar order and
prosperity. Americans especially showed their confidence in the
future of sugar by pouring large sums of money into Cuban sugar
production.
But the international sugar industry was in for a rude shock.
World sugar production began outstripping world demand in 1925.
Surpluses accumulated and prices dropped below 1922 levels. The
trend in world production continued upward even in the face of mount-
ing surpluses and unprofitable prices. This was partly because of
artificial stimulation of beet-sugar production in countries which had
historically imported sugar but which desired to become self-sufficient.
In addition, there were tremendous improvements in methods of culti-
vating and processing sugarcane during the 1920's and early 1930's.
Except for a slight upturn in 1927, .world sugar prices did not improve
between 1925 and 1928. In 1929 prices began to decline once more.
The situation worsened each year from 1929 to the bottom of the
general depression in 1932-33.
The depression in world sugar, in both the early and late 1920's,
was felt by domestic producers as well as by producers in the large
exporting countries as U.S. prices generally moved with world prices.
In 1921, the U.S. price was lower than at any time since 1916, and
Congress raised the sugar tariffs. The duty on sugar from Cuba, our
principal foreign competitor, was increased in 1921 from 1 to 1.60 cents
a pound, and in 1922 to 1.7648 cents a pound. The duty on other
foreign sugar was also increased each time so that the Cuban tariff
preferential was maintained.
As the world price was firm, these increased duties solved the
immediate price problems of domestic producers. In fact, when the
world price strengthened in 1923 and 1924, consumers complained
that the tariffs were forcing the U.S. price too high.
When the world depression in sugar became serious in late 1928
Congress was asked for still higher tariffs to offset world price re-
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SUGAR ACT AMENDMENTS OF 1962
ductions. As a result, in 1930 the duty on Cuban sugar was raised
to 2 cents a pound and the duty on other foreign sugar was raised to
2.5 cents. However, the bottom was falling out of the world sugar
market. By May 1932, the world price of raw sugar dropped to less
than 1 cent a pound. The U.S. price followed the world price down-
ward reaching the depression low of less than 3 cents a pound in 1932-
the 2-cent duty on Cuban sugar plus the world price and the cost of
freight from Cuba.
Although the domestic sugar price was quite low compared with
prices in previous years, the duty did hold the price at an irreducible
minimum-a guarantee that other agricultural enterprises did not
have. The duty-paid price actually permitted production to increase
in Hawaii, Puerto Rico, the Philippine Islands, and the beet area.
The increase in production in the beet area was not due to the fact
that returns from sugar were high at the going price but only that com-
peting crops-promised even lower returns at that time. Technological
progress and the effort to offset low prices by increased output caused
production to climb in the islands.
It was generally agreed that domestic producers needed higher
prices if they were to realize fair returns. On the surface at least,
the tariff promised to give sufficient protection to our sugar producers
if it were raised high enough. But in the severe depression years
of 1932 and 1933 it became clear from two important standpoints that
further increases in the tariff would not be a solution to the sugar
problem.
First, the stimulus of high tariff protection was already causing
overproduction in certain domestic areas, thus offsetting the price
benefits of the protection. It was apparent that if the tariff were
raised enough to afford adequate returns to growers in the highest
cost areas, production in other areas would have been excessively
stimulated and our market further crowded.
Second, Cuba's income from sugar had fallen so drastically that
changes were needed that would help improve her economy and her
trade with the United States. A 20-percent duty preference since
1903 had made Cuba the source of more than 98 percent of the foreign
sugar entering the United States. After 1930, imports of sugar from
Cuba fell to less than 30 percent of our supply from both domestic and
foreign sources and the value of our annual exports to Cuba fell to a
low of about 25 millions of dollars after having averaged well over 150
millions for the decade ending in 1930. Tariff increases all over the
world had encouraged production in importing countries, reducing
the demand for Cuban sugar in other countries, also. As a conse-
quence, Cuba was compelled to cut production substantially. The
one crop on which Cuba's livelihood primarily depended was almost
unsalable.
During the early months of 1933, the U.S. Tariff Commission made
a careful appraisal of the prevailing sugar situation and recommended
a program emphasizing supply controls rather than the traditional
tariff method of assistance. In a letter to the President of the United
States, dated April 11, 1933, the Chairman of the Commission noted
the failure of the tariff to solve the sugar problem. He pointed out
that the price had declined to disaster levels for both American and
Cuban producers; that both the domestic industry and that of Cuba
required -price relief; that prices should be raised by limiting, through
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SUGAR ACT AMENDMENTS OF 1962 33
it quota system, the supply of sugar offered for sale in this country;
and that if some type of quota system were instituted by this country,
the duty on Cuban sugar might be reduced to help restore the pur-
chasing power of Cuba.
The first attempt to develop a new sugar program was made in 1933
by representatives of the sugar industry under authority of the Agri-
cultural Adjustment Act. That act empowered the Secretary of
Agriculture to raise farm prices and restore farmers' purchasing power
by two methods: (1) By restricting production of "basic" farm com-
modities and making benefits payments in return for restriction; and
(2) by restricting sales of farm products through voluntary marketing
agreements with distributors and processors. Since sugar was not
classed as a basic commodity in 1933 (it was a basic commodity from'
1934 to 1936), the Secretary asked the various segments of the in-
dustry to meet in Washington and work out a plan for improving and
stabilizing sugar prices under the voluntary marketing agreement
authority of the Agricultural Adjustment Act.
During the summer of 1933, numerous conferences were held by
representatives of the industry to develop a marketing agreement for
sugar. Many of the sessions were quite stormy owing to the difficul-
ties in settling the differences of the conferees. Any plan that would
increase the price of sugar involved cutting supplies placed on the
market, and naturally, each area was interested in having the other
area do most of the cutting. In September, a plan was submitted to
the Secretary of Agriculture for his approval. The plan was called
the stabilization agreement and was designed to accomplish stabiliza-
tion in four ways: (1) The fixing of minimum prices for raw sugar; (2)'
the limiting of total deliveries of sugar to the U.S. market and the
allocation of a share of the market to each domestic and foreign pro-
ducing area through a quota system; (3) the limiting of production in
each domestic area to fit the marketing quotas; and (4) the prohibi-
tion of so-called unfair methods of competition, such as secret rebates,
concessions, and price discounts, among the distributors of sugar.
After considering the stabilization agreement the Secretary con-
cluded that the plan was unworkable on the grounds that it would
tend to increase rather than remove the disparity in agriculture's
purchasing power. The Government further indicated that "no effec-
tive control of production was contemplated" under the plan.
Another objection to the plan was that it did not provide for a reduc-
tion in the Cuban tariff nor, the Government believed, adequate shar-
ing of our market with Cuba.
The Sugar Stabilization Agreement did not go into effect. But its
formulation made possible the later enactment of the first sugar leg-
islation, the Jones-Costigan Act. In developing the plan the industry
had, for the first time, gotten together, thrashed out its problems, and
agreed on such controversial matters as the need for balancing sup-
plies with demand and of assigning under a quota system a portion of
the market needs to each area.
When the stabilization agreement was rejected, the Government
used the plan as a starting point and drafted a new set of proposals.
These proposals were recommended by the President to Congress for
legislative action in early 1934. On May 9 of that year, the President
approved the Jones-Costigan Act which included most of the Presi-
dent's recommendations. Succeeding sugar legislation has carried for-
ward the basic philosophy underlying the Jones-Costigan Act.
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34 SUGAR ACT AMENDMENTS OF 19 6 2
THE SUGAR ACTS, 1934-62
The Jones-Costigan Act, an amendment to the Agricultural Adjust-
ment Act, contained six principal features for dealing with the sugar
problem. These were (1) the determination each year of the quantity
of sugar needed to supply the Nation's requirements at prices reason-
able to consumers and fair to producers; (2) the division of the U.S.
sugar market among the domestic and foreign supplying areas by the
use of quotas and subordinate limitations on offshore direct consump-
tion sugar; (3) the allotment of these quotas among the various proc-
essors in each area; (4) the adjustment of production in each area to
the established quotas; (5) the levying of a tax on the processing of
sugarcane and sugarbeets, to proceeds of which to be used to make
payments to producers to compensate them for adjusting their pro-
duction to marketing quotas to augment their income; and (6) the
equitable division of sugar returns among beet and cane processors,
growers, and farmworkers.
The act remained unchanged until early 1936 when the Supreme
Court ruled that a tax on rocessors of agricultural commodities was
unconstitutional when usedpas a device to control production. In view
of this decision, Congress repealed the provisions of the act permitting
the imposition of processing taxes and the making of production con-
trol contracts between the Government and growers. But the quota
and allotment system remained in effect.
The repeal of the processing tax and payment provisions of the
Jones-Costigan Act was considered crippling to the sugar program by
the Government and others interested in the program because it
removed the incentive to growers for holding production in line with
quotas. Therefore, in the following year, the President recommended
that Congress enact new legislation embodying, in general, the prin-
ciples of the earlier legislation. This recommendation resulted in the
enactment of the Sugar Act of 1937. To meet the objections of the
Supreme Court to the old processing tax, the new excise tax was not
related to Government payments to growers. The new act author-
ized the Secretary of Agriculture to make such payments out of the
Treasury from funds appropriated for this purpose.
The Sugar Act of 1937 was originally scheduled to expire in 1940.
However, it was extended to 1941, them from 1941 to 1944, from 1944
to 1946, and again from 1946 through December 31, 1947. The
quota limitations were lifted by Presidential proclamation from
September 11 to December 31, 1939. because of scare buying after
the outbreak of war in Europe. They were again lifted by the
President from April 1942 through 1947 during this country's war
emergency.
The Sugar Act of 1948 superseded the 1937 act and extended the
sugar program through December 31, 1952. The new legislation did
not change the basic objectives of the Sugar Act of 1937 but it did
change the method of establishing quotas. In the 1937 act, a fixed
percentage of the estimated requirements was assigned to each
domestic and foreign area. The Sugar Act of 1948, however, assigned
fixed quantities to domestic areas and the Philippines and variable
quotas to Cuba and "other foreign countries" by distributing the
balance of our requirements to these countries on a percentage basis.
This gave the benefit of our increased consumption largely to Cuba.
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SUGAR ACT AMENDM)NTSQF,.1962 ~ie~
Also, it was known that the Philippines would have large sugar
deficits for several years, and 95 percent of these were assigned to
Cuba.
This country felt obliged to help Cuba to market its record crop in
the face of anticipated decline in world demand. We' had strongly
urged Cuba to increase production during World War II to help make
up the loss of Philippine sugar and to supply the needs of our war
emergency. Cuba responded to the request, and marketed a large
part of its output to this country at prices far below those prevailing
in the world free market.
In 1951, Congress again reviewed the sugar program and the deed
for continuing protection for the domestic industry through special
legislation after December 31, 1952, when the Sugar Act of 1948 was
due to expire. In September 1951, the Sugar Act of 1948 was amended
and extended from January 1, 1953, to December 31, 1956.
Amendments to the act primarily concerned quotas. The Puerto
Rican quota was increased from 910,000 tons to 1,080,000 tons and
the Virgin Islands quota from 6,000 to 12,000 tons. Participation of
Cuba and other foreign countries in the overall variable quota was
changed somewhat. Other foreign countries were granted 4 percent
of the overall variable quota instead of 1.36 percent as provided in the
unamended act. Cuba's share was set at 96 percent. A liquid
sugars quota was assigned to the British West Indies in addition to
the quotas previously allotted to Cuba and the Dominican Republic.
In addition, some revisions were made in the method of reassigning
among other areas the unfilled portion or deficit in the quota of a
particular area.
In May 1956, the Sugar Act of 1948 was again amended and ex-
tended to December 31, 1960. The amendment restores to the
domestic areas participation in the growth of our sugar market.
Beginning in 1956 market growth in excess of 8,350,000 tons is shared
55 percent by domestic areas and 45 percent by foreign countries.
The first 165,000 tons of increased quotas for domestic areas are
assigned 51.5 percent to the domestic beet area and 48.5 percent to
the mainland cane area; the next 20,000 and 3,000 tons:are assigned
to Puerto Rico and the Virgin Islands, respectively, and increases in
excess of 188,000 tons are apportioned among all domestic areas on
the basis of quotas then( in effect for each domestic area. The increase
in quotas for foreign countries other than the Republic of the Philip-
pines resulting from market growth in excess of 8,350,000 tons is
assigned in the ratio of 43.2 percent to Cuba and 1.8 percent to all
other, such foreign countries in 1956, and 29.59 percent and 15.41
percent, respectively, in '1957 and each subsequent year. The quota
for the Republic of the Philippines remains unchanged throughout
the 'extension of the act. Deficits in that part of any domestic area
quota which pertains to sugar requirements in excess of 8,350,000 tons
are prorated to the other domestic areas only. As in the past,. Cuba
shares in the proration of domestic area deficits resulting from the
inability of any domestic area to market the portion of its quota
pertaining to sugar requirements up to 8,350,000 tons. In addition
to other amendments of an administrative or technical nature, there
8 Liquid sugar is defined as noncrystalline sugar containing nonsugar solids (excluding any foreign sub-
stances that may have been added or developed in the product) equal to not more than 6 percent of total
soluble solids. This is exclusive of sirup of cane juice produced from sugarcane grown in the continental
United States.
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36 SUGAR ACT AMENDMENTS OF 1962
are also some changes in the provisions for the limitation of direct
consumption sugar entry within the offshore quotas. Two short-term
extensions provided for continuation of the Sugar Act through June
30, 1962, with significant amendments first effective in July 1960.
The amendments and their effects are described in the following
sections titled "Establishing Quotas" and "Deficits in Quotas."
The aims of sugar legislation
The preamble of the Sugar Act of 1948, as amended, states that
its purpose is "to regulate commerce among the several States, with
the territories and possessions of the United States, and with foreign
countries; to protect the welfare of consumers of sugars and of those
engaged in the domestic sugar-producing industry; to promote the
export trade of the United States: and for other purposes." Stated
more directly, the act is designed to maintain a healthy and competi-
tive domestic sugar industry of limited size; to assure adequate sugar
supplies to consumers at reasonable prices; and to promote our general
export trade. Previous legislation had the same basic purposes.
How the act works
Determining the sugar needs of consumers.---Title II of the act,
called "Quota Provisions," requires the Secretary of Agriculture to
determine how much sugar will be needed to fill U.S. requirements
during each calendar year. The Secretary must make his determina-
tion in December for the following year, but he may revise it up or
down during the year if the needs change. The sugar determination
establishes the quantity of sugar in short tons, raw value, that may be
marketed in the United States during the year under consideration.
In making his initial estimate the Secretary uses as a starting point
the quantity of sugar distributed during the 12-month period ended
October 31 next preceding the calendar year for which the determina-
tion is being made. Then he must make allowances for deficiencies
or surpluses in the Nation's sugar inventories and for changes in
consumption caused by changes in population, and demand conditions.
When the Secretary has arrived at a tentative figure, using the stand-
ards outlined above, he must then consider the price that this quantity
of sugar would likely bring on a wholesale refined basis. If the esti-
mated sugar price will be excessive to consumers or too low to protect
the welfare of the domestic industry, the Secretary is authorized to
increase or decrease the determination of the quantity of sugar that
may be marketed to achieve a fair and reasonable price.
Since the war, the Secretary has held a public hearing each year at
which all interested persons-industrial users, and other consumers,
distributors, refiners, beet and cane processors, and growers-may
present views or arguments on the matter. This meeting is usually
held in November each year, a few weeks before the requirements
determination in December. Written statements may also be sub-
mitted for the Secretary's consideration.
The Secretary must also determine requirements for local consump-
tion in Hawaii and Puerto Rico so that the general price and marketing
objectives will be the same in all American markets.
Establishing quotas tor domestic and toreign producing areas.-After
the Secretary has determined overall requirements, each domestic
and foreign producing area supplying the United States with sugar
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is assigned a quota representing its share of the market as specified
by the act.
Under amendments enacted in July 1960 and March 1961, the
President determines, notwithstanding any other provisions of title
II, the quota for Cuba for the period ending June 30, 1962, in such
amounts less than would be provided in title II as he finds to be in
the national interest, and causes or permits to be imported from other
sources a quantity of sugar not in excess of the reductions in quotas
made under this now provision. The quantities thus provided for
under the proclamations of the President are called "allocations" and
"authorizations" of "nonquota purchase sugar" to distinguish them
from the quotas established under the longstanding provisions of the
act. (See p. 27.)
Under the quota provisions, the domestic sugar-producing areas
are assigned a base of 4,444,000 short tons, raw value,' plus 55 per-
cent of requirements in excess of 8,350,000 tons. Specific quantities
of ? the domestic share of the increment between 8,350,000 tons and
8,691,818 tons are allocated to individual domestic areas. The
domestic share of requirements in excess of 8,691,818 tons is prorated
among domestic areas on the basis of their quotas at that level.
The quota for the -Republic of the Philippines is fixed at 952,000
tons of sugar (currently 980,000 tons, raw value). Quotas for Cuba
and "other foreign countries" (the latter are sometimes called "full-
duty countries" to distinguish them from Cuba and the Philippines)
vary each year, the exact amount depending on the tonnage set by
the Secretary's sugar requirements determination.
The proration to the various domestic and foreign supply areas at
the specified levels of proration is shown in table 12. Most of the
quotas for the domestic, offshore and foreign supply areas may be
filled only with raw sugar, which is defined as sugar which is to be
further refined or improved in quality on the mainland. Other sugar
is called "direct-consumption sugar," and includes primarily white
refined and other types of sugar familiar in home consumption.
Prior to 1960, about 650,000 tons of direct-consumption sugar were
entered from offshore domestic and foreign areas each year. In 1960
the quantity was somewhat smaller and in 1961 only one-half as
large because of discontinuing such imports from Cuba. Unrestricted
imports of refined sugar would reduce the volume of mainland refining
and would create price problems because offshore direct-consumption
sugar is quoted at lower prices than sugar refined in the United States.
8 "Raw value" is the term used in the Sugar Act to express in a common unit the various types of raw and
refined sugars that move in commerce. One ton of refined sugar equals 1.07 tons of sugar, raw value.
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38 SUGAR ACT AMENDMENTS OF 1962
TABLE 12. Proration of quotas
[Short tons, raw value]
Quotas of
Pereentano
Quotas when
domestic areas
proration for
total quotas are
when total
total quotas in
Area
8,350,000 tons
quotas are
excess of basic
8,691,818 tons
levels shown in
cols. (1) or (2)
(1)
(2)
(3)
Domestic:
Domestic beet sugar--------------------------
- 1,800,000
1,884,975
22.3821
Mainland cane sugar--------------------------
500,000
680,025
6.8871
Hawaii---------------------------------------
1,052,000
1,052,000
12.4914
Puerto Rico----------------------------------
1,080,000
1,100,000
13.0613
Virgin Islands--------------------------------
12,000
15,000
.1781
Total domestic------------------------------
4,444,000
4,632, 000
55.0000
Foreign:
Philippines -----------------------------------
980,000
-
--------
0
0
Cuba----------------------------------------
2,808,960
--------
-
29.5900
Full-duty countries-------------------------------
117.040
--------
15.4100
Peru----------------------------------------- -
50.062
-
--------
4.3300
Dominican Republic__________________________
29,482
--------
4.9500
Mexico---------------------------------------
11, 259
--------
6.1000
Nicaragua------------------------------------
8,001
--------
.5739
Haiti-----------------------------------------
4,820
------------------
.2090
Netherlands----------------------------------
3,000
------------------
.0696
China (Formosa) -----------------------------
3,000
------------------
.0594
Panama--------------------------------------
-3,000
-
Costa Rica------------------------------------
3,000
------------------
.0587
Canada---------------------------------------
631
0
United Kingdom-----------------------------
516
------------------
0
Belgium-------------------------------------
182
------------------
0
British Guiana-------------------------------
84
------------------
0
Hong Kong-----------------------------------
3
------------------
0
Total,foreign -------------------------------
3,906,000
------------------
45.0000
Grand total---------------------------------
8,350,000
--------------?--
100.0000
Nonquota purchase sugar.-Sugar to replace a Presidential reduc-
tion of the quota for Cuba is directed in the act to be apportioned as
follows:
(1) Any foreign country with a quota between 3,000 and 10,000
short tons, raw value, shall be permitted to enter a total of 10,000
tons during the calendar year;
(2) Fifteen percent of the remainder shall be purchased from
the Republic of the Philippines;
(3) The balance, including any unfilled balances from alloca-
tions already provided, shall be purchased from foreign countries
having quotas other than those provided in (1) above, prorated
according to the quotas established, except that any amount
which would be purchased from any country with which the
United States is not in diplomatic relations need not be pur-
chased;
(4) Any additional amounts needed may be purchased from
any foreign country without regard to allocation, except that for
the period April 1961-June 1962 special consideration shall be
given to countries of the Western Hemisphere and to those coun-
tries purchasing U.S. agricultural commodities.
To the extent that the President finds that raw sugar is not reason-
ably available, direct, consumption sugar may be permitted or caused
to be imported. Of the total replacement of Cuban sugar in 1960,
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SUGAR ACT AMENDMENTS OF 1902
about 967,000 short tons, raw value, were authorized for purchase
under the formula outlined in items 1, 2, and 3, above, about 233,000
tons were authorized under item 4 by the Secretary of Agriculture
with the concurrence of the Secretary of State, as provided in the
proclamation of the President, and 236,000 tons were not allocated.
In 1961 the three corresponding quantities were about 1,874,000 tons,
1,243,000 tons, and 180,000 tons, respectively.
The distribution of our total sugar supply in 1959, the last year in
which Cuba's quota was established in the traditional manner, and
for 1960 and 1961 is shown in table 13. The adjusted quotas shown
for Hawaii and Puerto Rico and in 1959 and 1960 for the Virgin
Islands show "deficits." Those for the other domestic areas and for
Cuba (1959 only) include their shares of the deficits. The domestic
area quotas were not entirely filled in 1959 (by about 155,000 tons) or
in 1960 (by about 600,000 tons). Fairly substantial shortfalls in
1961 foreign authorizations were in prospect late in the year. Thus,
the supplies actually becoming available within the total quotas and
authorizations were about 9,245,000 tons for 1959, 9,520,000 tons for
1960, and about 9,700,000 tons for 1961.
TABLE 13.-Sugar quotas and nonquota purchase authorization, 1959-60 (final);
1961 in effect Nov. 20
[Short tons, raw value]
Area
1959
1960
1061
Domestic beet________________________________________________
2,267,005
2,514,945
2,609,170
Mainland cane_______________________________________________
697,783
773,873
715,000
Ilawaii_____-----------------------------------
977,970
940,444
1,030,000
Puerto Ricro_--_----??___--?_?----_---?-----?--------?-
960,875
893,620
980,000
Virgin Islands_____
12.405
8,618
17,330
Republic of the PhllipPines -----------------------------------
980,000
1,156,426
1,470,731
Cuba---------------------------------------------------------
3,215,457
2,419,655
0
Peru- - -----------------------------------`-----------------
95,527
273,827
636,377
Dominican Republic__________________________________________
81,457
452.814
333,880
Mexico-------------------------------------------------------
64,809
400,437
685,000
Nicaragua __--------------------------------------------------
14,027
41,766
43,368
Haiti---------------------------------------------------------
7.014
35,672
45,273
Netherlands--------------------------------------------------
3,731
10,556
10,000
China (Formosa)_____________________________________________
3,624
10,476
170,028
Panama--------------------
3,624
10,476
10,000
Costa Rica---------------------------------------------------
3,616
10.409
30,250
Canada-------------------------------------------------------
Cana
631
2,288
1,897
United Kingdom_____________________________________________
d
616
1,871
1,660
a-------------------------------------------------------
182
660
1,835
Bong Kong---------------------------------------------------
3
11
30
Federation of the West Indies and British Guiana ------------
84
92,849
266,007
El Salvador---------------------------------------------------
0
6,000
12,000
Guatemala---------------------------------------------------
0
6,000
17,000
Brazil---------------------------------------------------------
0
100,347
306,474
Ecuador------------------------------------------------------
Ecuado
0
0
06.000
0
ia-----------------------------------------------------
0
0
46,000
French West Indies-------------------------------------------
0
0
76,00
Australia-----------------------------------------------------
0
0
90,00(1
Paraguay----------------------??---------------------------
0
0
5,00(1
India---------------------------------------------------------
0
0
175,000
Subtotal ------------------------------------------------
9,400,000
10,164,100
1 9,820.000
Not authorized for purchase__________________________________
______________
235,900
180,00()
Total___________________________________________________
9,400,000
10,400,000
10,000,000
I Of this quantity approximately 14,900 tons were not imported by Mar. 31, 1961, and cannot be authorized
for importation after that date.
Deficits in quotas.-If the Secretary finds that any domestic area or
Cuba cannot supply its quota, he must allocate the deficit among the
rest of these areas in proportion to their quotas, except that Cuba
does not share in any deficit of a domestic area quota after mid-1960
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40 SUGAR ACT AMENDMENTS OF 1962
nor prior to that time in any deficit in that part of the quota i'estiiting
from sugar requirements in excess of 8,350,000 tons. For example,
in 1961, Hawaii and Puerto Rico were able to supply less than the
quotas provided for within an 8,350,000 ton total. In this year the
entire deficits were shared by the domestic beet and mainland cane
sugar areas, including 69,542 tons that would have been Cuba's share
as provided in the act prior to 1960.
Deficits in the quotas for the Republic of the Philippines, under
pre-1960 provisions, were allocated 96 percent to Cuba and 4 percent
to other foreign countries. A deficit in an individual other foreign
country proration is allotted among the remaining countries of the
"other foreign countries" group. Cuba is assigned any deficit in the
overall quota for this group.
If any area is unable to fill the deficit assigned to it, the deficit may
be reapportioned to such other areas as the Secretary determines is
necessary to obtain the sugar.
A deficit determination does not deprive any area or country of the
right to supply its full quota if it later finds itself able to do so. This
does not apply, however, to nonquota purchase allocations which may
be withheld or withdrawn from authorization.
Establishing marketing allotments.-One important function of the
sugar program is to promote orderly marketing. The establishment
of quotas may in itself accomplish this, but sometimes quotas are not
enough. This is particularly true when supplies in the producing
areas materially exceed quotas. If, for example, a domestic area has
more sugar available for marketing than its quota, each of the various
processors is likely to rush sugar to market to make sure that he dis-
poses of his supply before the quota is filled. This tends to bring
about a temporarily oversupplied market and panicky sellers and
usually causes an unwarranted decline in price.
If the Secretary finds that the pressure of supplies in an area is
likely to cause disorderly marketing, he must allot the quota fairly
among the processors. The allotment is based on past marketings
of sugar by the various processors, their ability to market sugar during
the season for which the allotment is being made, and on their sugar
processings from beets or cane to which "proportionate farm shares"
pertain. In 1961, only the quota for the domestic beet sugar area
was allotted.
Assigning proportionate shares.--As pointed out above, the Sugar
Act requires the Secretary to divide the U.S. sugar market among do-
mestic and foreign areas and, if necessary, for orderly marketing, to
divide quotas among processors and importers.
For domestic areas, the act also requires the Secretary to divide
the market among individual farms. In dividing the market among
farms, however, the Secretary is dealing with a different total quan-
tity of sugar than when determining quotas and allotments. He must
allow for enough sugar to provide a normal carryover as well as the
amount of sugar represented by the quota. Because of the time it
takes to grow and process a crop of sugar beets or sugarcane, the
"proportionate shares" must be determined long before the quota is
finally established to regulate the marketing of sugar made from that
crop.
The Secretary must determine the quantity of sugar each domestic
area may carry over into the following year. Then he makes allow-
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SUGAR ACT AMENDMENTS OF 1962 41
antes for deficiencies or surpluses in the current stocks in the respec-
tive areas and adds to or subtracts from the quota sufficiently to assure
a normal carryover into the next year. The resultant amount, which
represents the total quantity of sugar that may be produced in the
area, is then divided among farms. Each farm's allotment, known as
its "proportionate share," may be expressed in acres, tons of sugar-
cane or beets, or in tons of sugar, raw value, which can be normally
produced from cane or beets.
For many years, proportionate shares in the several domestic areas
were simply determined as the beet or cane acreages actually grown
or, in the offshore domestic areas, as the tonnage of raw sugar actually
processed from. the sugarcane grown. In recent years, however, it
was necessary to determine restrictive proportionate shares in some
of the areas in order to prevent the accumulation of sugar stocks in
excess of marketing quota and normal carryover needs. Such restric-
tions were in effect on an acreage basis in the mainland cane area for
crop years 1954 through 1958 and were established but later rescinded
for the 1959 crop. In the domestic beet area such restrictions have
applied to the 1955 through 1960 crops. Restrictive proportionate
shares were in effect in Puerto Rico on a sugar tonnage basis for the
crop years 1953 through 1956. No such restrictions applied in any
domestic area for the 1961 and 1962 crops. '
The purpose of assigning specific shares to farms in a particular
area is to adjust crop output to the area's quota and normal carryover
and to assure that each farm will share in this adjustment equitably.
In determining the proportionate share for a farm the Secretary may
consider past production and the ability of the farm to produce beets
or cane during the year for which the determination is being made.
The act requires the Secretary to protect the interests of small and
new producers and producers who are tenants and sharecroppers in
assigning shares and to consider the interest of producers in any local
producing area where past production has been seriously affected by
abnormal and uncontrollable natural conditions.
In actual practice, proportionate shares are not made restrictive
unless production in an area has exceeded or promises to exceed the
quota and normal carryover, and marketing allotments have failed
to bring about a balance between production and allowable area
marketing. Marketing allotments are applied when excessive pro-
duction and disorderly marketing first become problems. Because
of the administrative detail involved and the complicating fact that
the harvest season in most areas does not coincide with the calendar
year-i. e., the quota year-plans for assigning specific proportionate
shares must be made well in advance of the crop year for which they
will be in effect. Thus, when it appears that there will be a reason-
able balance between an area's production and its quota or when an
area clearly will not be able to produce enough to fill its quota, propor-
tionate shares are not made restrictive. For instance, the 1957 pro-
portionate share determination for Puerto Rico stated that the share
for each farm is "the amount of sugar, raw value, commercially recov-
erable from the sugarcane grown thereon and marketed (or processed
by the producer) during the 1956-57 crop season for the extraction of
sugar or liquid sugar."
Producers are not required to stay within their assigned proportion-
ate share if they do not wish to do so. However, in order to receive
H. Rept. 1829, 87-2--8
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42 SUGAR ACT AMENDMENTS OF 1962
"conditional payments" from the Governments, growers must abide
by the proportionate share determination. Since these payments
are an important part of their income, the growers comply with this
determination. If all the sugar processed from beets or cane in ex-
cess of a grower's proportionate share is used for livestock feed or for
the production of livestock feed, he will receive conditional payments
on his proportionate share.
Assuring fair division of the benefits of the sugar program.-The
principal way in which the domestic industry derives benefits from
the sugar program is through the stabilization of raw and refined
sugar prices at reasonably profitable levels. But the framers of the
Jones-Costigan Act did not leave solely to competitive forces the
carrying of these benefits through retailers, wholesalers, refiners, and
importers, to beet and sugarcane processors, growers, and farm-
workers. They provided in that act for a system of grower payments
to assure that this sharing would take place. This system was
carried forward in succeeding legislation though, as pointed out
earlier, handled in a different manner. Under the present act, these
payments are called conditional payments.
Conditional payments are appropriated annually by the Congress
and financed out of the general fund of the Treasury. However, a
tax on sugar provides funds for the Treasury which more than offset
the total of all conditional payments plus the costs incurred by the
Department of Agriculture in administering the Sugar Act. The
basic rate is 0.5 cent a pound, raw value, on all sugar domestically
manufactured, paid principally by beet processors and cane sugar
refiners, and on importers of direct-consumption sugar. The provi-
sion for this tax is incorporated in the Internal Revenue Code. The
tax is refunded on sugar used for livestock feed and on sugar exported.
As indicated in the section on proportionate shares, conditional
payments act as an incentive to growers to adjust their production
to the quota and carryover needs. But this payment system. also
has three other objectives. These other objectives are (1) to help
provide adequate incomes to growers; (2) to assure growers and
fieldworkers a fair sharing of returns to the industry; and (3) to
prevent the employment of child labor in fieldwork.
The first objective is accomplished by augmenting grower income
through conditional payments. The second and third objectives are
achieved by requiring growers to observe certain conditions in order
to receive conditional payments. These conditions are in addition to
the requirement that growers comply with their proportionate share
determination. They are as follows:
(1) Growers, who are also processors, are required to pay fair prices
for cane or beets purchased from other growers. Fair prices are de-
termined annually by the Secretary for each domestic area after public
hearings and after investigation of the economic position of growers
and processors. The fair price determinations fix the minimum levels
of prices to be paid to growers by processors who are growers. In
addition, they affect the level of prices paid to growers by processors
who are not growers. Processors who are not growers pay about the
same prices as grower-processors.
(2) Growers must pay fieldworkers in full for work performed on
cane or beets and at rates not less than those determined by the Secre-
tary of Agriculture to be fair and reasonable. Each year the Secre-
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SUGAR ACT AMENDME S
tary determines fair and reasonable wages for fieldworkers in each
domestic area. These wages are established after investigation and
public hearings at which all interested parties may testify.
(3) Growers must not employ children under the age of 14 years or
permit them to work on sugarbeets or sugarcane. Children between
the ages of 14 and 16 may not be employed or permitted to work for
more than 8 hours a day. The children of growers who own at least
40 percent of the crop they are cultivating are exempted from these
conditions. If these conditions are not observed by a grower he is
penalized by a deduction of $10 from his payment for each child and
for each day or part of a day during which such child was employed or
permitted to work.
The rates of conditional payments vary with the volume of sugar
produced from the cane or beets grown on a farm and are graduated
downward from small to large production, The basic rate of $0.80 a
hundred pounds of sugar, raw value, is paid on the first 350 short tons
of commercially recoverable sugar contained in the beets or cane
produced on a farm. This rate is reduced progressively to a minimum
of $0.30 a hundred pounds on all sugar produced in excess of 30,000
short tons from the beets or cane on a farm. Including the crop
deficiency and abandonment payments discussed below, the 13-year
(1948-60) average rate of payment was $0.68 a hundred pounds,
ranging from $0.46 in Hawaii where most of the production is on large
farms to $0.83 in the beet area. Payments in the mainland cane area,
Puerto Rico, and the Virgin Islands averaged $0.68, $0.69, and $0.69 a
hundred pounds, respectively, during the same period.
The average payment rate for all domestic areas exceeds the tax
rate-an apparent paradox in view of the fact that total tax receipts
exceed the cost of the program. The explanation is that the tax is
imposed on all sugar (foreign and domestic) manufactured or imported
for direct consumption; but payments are made on domestic produc-
tion only.
Compensation for disaster losses.-The sugar program provides
limited benefits for growers in the form of special conditional pay-
ments for crop deficiency or abandonment caused by drought, flood,
storm, freeze, disease, or insects. For a farmer to be eligible for these
payments, natural disasters must cause damage to all or a substantial
part of the crop throughout the local producing area in which he is
located. In the case of a crop deficiency, the regular conditional
payment is made on the farmer's actual yield and an additional
payment is made sufficient to raise the total to the amount that would
have been paid had he obtained 80 percent of the normal yield of
commercially recoverable sugar. In the case of a bona fide crop
abandonment, payments are made on one-third of the normal yield
of abandoned acreage.
Payments for reduced yield are commonly known as deficiency
payments and payments for abandoned crops are called abandonment
payments. Both, however, are technically conditional payments
and are covered by the conditional payment provisions of the act.
From 1948 through 1960, deficiency and abandonment payments
averaged about $837,000 a year in the beet area, $136,000 a year in
the mainland cane area, and $218,000 a year in Puerto Rico. During
that period only $94,000 were paid out in Hawaii (in 1955 and 1960)
and only $89,000 in the Virgin Islands (in 1958 and 1960).
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SUGAR ACT AMENDMENTS OF 1962
Administrative procedures.-All regulations issued by the Agriculture
Department under the authority of the Sugar Act are first publicized
through an Agriculture Department press release, are published in the
Federal Register a few days after issuance, and are codified as "Title
7, Chapter XIII, of the Code of Federal Regulations."
Certain regulations must be preceded by public hearings. These
are marketing allotment orders, the determination of processes and
qualities which distinguish raw sugar and direct-consumption sugar,
and fair price and fair wage determinations. The rules governing the
procedures for the issuance of these regulations form parts 801 and
802 of the code.
Other sugar regulations may be issued without prior public hearings.
However, as noted earlier, it has become customary to conduct a hear-
ing in November of each year, prior to the issuance of the initial sugar
requirements determination for the following year. Informal public
hearings are also conducted before restrictive proportionate share
regulations (acreage allotments in the mainland areas) are issued.
Hearing notices, notices of proposed rulemaking, notices of recom-
mended decisions, and notices of tentative decisions are also publicized
through Agriculture Department press releases and, except for notices
of informal public hearings on proportionate shares, are published in
the Federal Register.
Growth cj the domestic industry (first curtailed, then increased moderately)
The imposition of sugar quotas and of production controls and the
drought in 1934 caused a, sharp cut in sugar production in the domestic
areas. Between 1923 and 1933, production in the domestic areas
(excluding the Philippines) increased from 2,046,000 to 4,036,000 tons.
In 1934 domestic production was cut to 3,580,000 tons. The following
year, 1935, domestic production was cut further to 3,420,000 tons.
The effect of the sugar program was even more striking if the Philippine
Islands are included as a domestic area, which they were in the pre-
World War II period. In the 10 years before quota restrictions, our
entries from the Philippines rose from 238,000 to 1,249,000 tons-an
increase of more than 400 percent. In 1935, entries from the Philip-
pines were only 917,000 tons within a quota of 982,000 tons. Produc-
tion in that country was also cut substantially as the United States
was its principal market. Considered together, domestic production
and Philippine imports were lowered 18 percent the first 2 years of
quota legislation.
By 1936, as the market expanded with increased population and
improved demand, the quota totals were increased. Under the Sugar
Act of 1937, any expansion in the U.S. market was shared propor-
tionately by both domestic and foreign areas. The 1937 act allotted
the quota for each domestic and foreign area in terms of a specific
percentage of overall sugar requirements. For domestic areas, these
percentages totaled 55.59 percent, and for the Commonwealth of the
Philippines, Cuba, and other foreign countries, 44.41 percent. This
quota relationship existed from 1937 to 1947, after which time the 1937
act was replaced by the Sugar Act of 1948.
The Sugar Act of 1948 established fixed quotas for domestic areas
and the Republic of the Philippines and flexible quotas for other
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foreign countries. The domestic quotas remained unchanged through
1955 except for the increase in the Puerto Rican and Virgin Island
quotas which were enacted in 1951 and became effective January 1,
1953. These increases permitted a 4-percent growth in total domestic
quotas during the 8-year period, 1948 through 1955. Therefore, most
increases in sugar requirements over that period were filled by imports
from Cuba and other foreign countries.
In 1956, the Sugar Act of 1948 was again amended and extended
through 1960, and the participation of the domestic areas in the
growth of our sugar market was restored. Since then, the domestic
areas have shared 55 percent of all market growth in excess of
8,350,000 tons.
Economic status of the domestic industry
Processors and refiners.-In general sugarcane and beet processors
have had stable and adequate earnings under the sugar program.
Only a few companies have gone out of business because of unprofit-
able operations. In contrast, when sugar prices were so erratic in
the 1920's and so depressed in the early 1930's, many failed to weather
the financial storms.
Refiners, like sugarcane and beet processors, have generally operated
profitably under the sugar program. However, their plight never
became as serious in the 1920's and early 1930's as that of the sugar-
cane and beet processors. One of the principal benefits the refiners
enjoy under sugar legislation accrues from the limitation the act places
on imports .and shipments from domestic offshore areas of sugar in
refined form. Unrestricted imports of refined sugar naturally would
reduce the volume of mainland refining and would create price
problems because offshore direct-consumption sugar is quoted at lower
prices than sugar refined in the continental United States.
Growers.-Growers' gross income has increased substantially since
the program began in 1934. This larger income is the result not only
of the influence of generally higher and more stable prices for sugar
but also of an increase in the growers' share of sugar returns. Proc-
erated profitably and at the same time have
have o
ll
p
y
essors genera
been able to pass on a higher proportion of total sales returns to
growers. This increased return to growers has been possible through
improvements in manufacturing efficiency on the part of the proc-
essors. In addition, the fair price determinations issued under sugar
legislation have assured an equitable share of returns going to growers
and have bolstered the bargaining position of growers who sell to
processors who are not growers.
Growers income per ton of sugarcane and sugarbeets has risen at a
higher rate than the price of refined sugar. The farmer is now re-
ceiving a larger percentage of the sugar dollar than he did before
1940. During World War II and the early postwar period returns
from sugarbeets and sugarcane were affected by subsidy and price
support programs under other legislation aimed at providing supplies
at controlled prices.
In recent years growers' income per ton of sugarbeets and sugarcane
has been well over twice as much as during 1935-39. Refined sugar
prices also increased over this period but less than growers' income.
This indicates that the growers' share in the sugar dollar has increased,
also.
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SUGAR ACT AMENDMENTS OF 1962
Before 1940 sugar-beet processors received a slightly larger share
of the sugar dollar than did the growers. Since then the growers'
share has increased substantially. The greatest increase took place
from 1945 to 1946. Since 1945 the growers' share of net sales proceeds
has typically been 58 percent. In addition, growers have received
Sugar Act payments and, in most years from 1943 through 1947,
Commodity Credit Corporation price support payments.
Growers in the domestic cane areas likewise have enjoyed a larger
share of sugar returns than formerly. In Louisiana, for example,
growers averaged about 62 percent of the total returns (excluding
Government payments) from sugar and molasses during the 1953-57
period whereas they averaged only about 55 percent from 1936
through 1940.
During the war years the price received by beet growers expressed
as a percentage of the parity price 4 reached very high levels in view
of the price support payments disbursed by the Commodity Credit
Corporation during that period. In spite of these payments, beet
acreage and production during the war years 1943-45 were greatly
reduced.
Since 1948 the price received by mainland sugarcane growers,
expressed as a percentage of parity price, has fluctuated more than
the corresponding price received by sugarbeet growers. This is to
be expected, because the sugarcane price is related to the average
raw cane-sugar price either during the week of sale or during the
sugarcane marketing season. By contrast, the sugarbeet price de-
pends on net returns from refined beet-sugar sales throughout the
year. For mainland sugarcane the returns as percentage of parity
vary considerably, the lowest in the 1948-60 period applying to the
1948 crop, the highest to the 1956 crop. Sugarbeet and sugarcane
prices for the years since 1950 would have been a lower percentage
of parity, if the old formula for calculating parity had remained in
eff ect.
Farmworkers
The standard of living of sugar beet and cane fieldworkers today
is greatly improved over the living standards of fieldworkers in 1934.
Early minimum wage rates established under the Sugar Acts tended
to become the rates actually paid. In more recent years, average
wages paid have tended to exceed the minimums determined, enough
so in Hawaii and Puerto Rico that determination of specific rates for
these areas has been discontinued. For the other areas, minimum
rates established for the 1961 crops were 340.7 percent higher than
those prevailing in 1934. On the other hand, the cost of food and
clothing increased by only 154 percent.
Sugar utilization
From the early 1820's to 1926, annual per capita distribution of
refined sugar in the United States increased steadily from 9 to 110
pounds. Per capita sugar deliveries during the period 1925-30 aver-
aged 106 pounds. During the depression years, 1932-34, per capita
sugar deliveries averaged only 95 pounds. The wholesale price of
sugar declined during that period to the lowest levels since the mid-
1890's, but the decline was less than the decline in the general price
level.
4 The
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Per capita distribution recovered somewhat in 1935 and remained
at about 97 pounds through 1940. (See Sugar Reports 90, table 3,
p. 12.) During the war, supplies were inadequate. Since 1947,
distribution has fluctuated rather widely from year to year, but was
rather constant by 3-year periods averaging 96 to 97 pounds a year.
In 1947, 1950, 1953, and 1956 industrial users accumulated stocks
and in 1948, 1951, 1954, and 1957 they reduced stocks. Per capita
sugar distribution during 1947-58 averaged 96.5 pounds, about 0.7
pound less than during 1935-40. The utilization of corn sweeteners
increased from 7 pounds in 1936 to 15 pounds in 1947 but declined
subsequently. It remained at . about 12 pounds through 1957 and
has been rising since the beginning of 1958.
In the last quarter of 1941, quota restrictions were virtually lifted
when the sugar determination was increased to 9 million tons; from
1942 through 1947 all quota restrictions on sugar were suspended.
During the World War II emergency period, the U.S. sugar supply
situation was tight. Imports from the enemy-held Philippines were
completely cut off and shipping space -for sugar from other offshore
areas was limited. Total sugar distribution was lowest during 1942
because of the loss of the Philippines and a sharp drop in imports
from Cuba. But the large quantity carried over from the 1941 supply
buildup helped ease the situation for consumers. The postwar
shortage was most acute in 1946. Because of short supplies in the
previous year, stocks had been depleted, while sugar distribution on
a per capita basis reached the lowest point in over 40 years.
Prices
The Sugar Act is a price-influencing mechanism but it leaves
ample room for price fluctuation. Since World War II domestic
sugar prices have been far more stable than world prices. Also,
domestic prices have been far more stable since World War II than
they were following World War I. During World War II sugar prices
were stabilized by price controls and consumer subsidies. The
Commodity Credit Corporation imported sugar from Cuba, duty free,
sold it at a loss, and absorbed costs to keep prices down to consumers.
In 1946 and 1947, when the subsidy programs were brought to an end
and costs of obtaining sugar rose, ceiling prices were increased.
Except for this one sharp price change and a temporary price peak in
the fall of 1939, sugar prices have been remarkably stable under the
Sugar Acts.
In relation to the price of other foods, the price of sugar in the
United States has declined greatly over the last century. After
declining sharply in the 20 years immediately following the Civil
War, the price of sugar has remained at moderately low levels except
during the post-World War I inflation period in 1920. Since 1940,
the index of the wholesale price of all foods has increased considerably
more than the wholesale price of refined sugar.
In 1961 the index of the wholesale price of all foods was 247 percent
of the 1940 level, whereas the wholesale price of sugar was only 213
percent of the 1940 level. When price controls were instituted in the
wake of the Korean conflict the Office of Price Stabilization exempted
sugar from price control on February 12, 1951, because inflationary
pressures had been warded off by the large distribution during 1950
and it was apparent that the Sugar Act would be able to deal with the
inflation problem as it related to sugar.
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48 SUGAR ACT AMENDMENTS OF 1962
Imports of sugar
Since 1903 Cuba has been our most important foreign source of
sugar. Imports from Cuba first exceeded 1 million tons in 1903,
2 million tons in 1913 and 3 million tons in 1919.
In the early 1930's imports fell sharply. In 1933, we imported
only 1,573,000 tons from Cuba-less than in any year since 1909.
The volume of imports increased after 1933 and averaged about 2
million tons from 1936 through 1940. With the virtual lifting of
quota restrictions in the latter part of 1941 and the suspension of the
quotas from 1942 to 1947, our imports from Cuba increased substan-
tially, averaging 2,800,000 tons and reaching a high of 3,943,000 tons
in 1947. From 1948 through 1958 an annual average 3 million tons
of sugar was imported from Cuba.
The value of Cuban sugar imports increased even more than the
quantity. Due to the increase in the level of sugar prices and reduc-
tion in the U.S. tariff, Cuban sugar producers received about 11 times
as much income from their exports to this country in 1958 as they did
in 1933. In 1933, raw sugar exports to the United States yielded 1.1
cents a pound to Cuban producers, in 1958, 5.3 cents.
Imports from full-duty countries were 4 percent or less of total
imports during the period 1937 through 1956 except in 1941. In the
latter year 190,000 tons were imported from full-duty countries.
Otherwise until 1953, the quantity exceeded 100,000 tons only in
1943 and 1944.
When the Sugar Act amendment of 1951 trebled the basic full-duty
country quota beginning in 1953 these countries responded with an-
nual average shipments of 119,000 tons of sugar during the 1953-56
period. Imports from these countries increased to 5 and 6 percent
in 1957 and 1958 as a result of the 1956 amendment to the Sugar Act.
It will be recalled that the quota of these countries amounts to 117,040
tons plus 15.41 percent of our sugar requirements above 8,350,000 tons.
Our quota imports from these countries averaged 258,000 tons in
1957-59. As a result of the cessation of imports from Cuba in inid-
1960, the imports from full-duty countries rose to about 1,631,000
tons in 1960 and to about 3,339,000 tons in 1961.
Changes in sugar tariff rates
While the sugar acts have been in effect, tariff rates on sugar have
been cut 75 percent (see table 13). The institution of the sugar quota
system for regulating sugar imports and domestic marketmgs placed
tariffs in a secondary role in protecting and maintaining the American
sugar industry. It became possible to reduce tariff rates without
jeopardizing the industry's economic position.
The United States-Cuban Convention of Commercial Reciprocity
of 1902 and the act carrying it into effect, approved in 1903, estab-
lished preferential rates for Cuba. The treaty and the act specified
that the tariff on Cuban sugar must be at least 20 percent below the
tariff levied on sugar imported from the full-duty countries. In 1903,
the Cuban rate was established at 1.348 cents a pound and the full-
duty rate at 1.68 cents a pound. Thse rates were subsequently
lowered and then increased, reaching a peak in 1930 under the Smoot-
Hawley Act of 2 cents per pound for Cuban sugar and 2.5 cents a pound
for full-duty sugar.
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SUGAR ACT AMENDMENTS OF 1962 49
TABLE 14.-U.S. sugar tarif, 1930-62
[Cents per pound, 06?]
Date effective
Cuban sugar
Sugar from
full-duty
countries
Philippine
sugar
June 18, 1030--------------------------------------------------
2.00
2,5000
Free
June 8, 1034----------------------------------------??------
1.50
1,8750
--------------
sept. 3,1934--------------------------------------------------
?00
--------------
--------------
Sept. 11,1039-------------------------------------------------
1.50
--------------
--------------
Jan. 1, 1940---------------------------------------------------
?90
--------------
--------------
Jan. 5, 1942
.76
--------------
--------------
July 29, 1942--------------------------------------------------
-----------
9375 .9375
-
Jan.1,1948---------------------------------------------------
.50
.8875
--------------
June 6, 1951---------------------------------------------------
--------------
.6260
-
Jan. 1, 1956---------------------------------------------------
--------------
--------------
0.025
Jan. 1, 1959----------------------------------------------------
--------------
--------------
.050
Jan. 1,1982---------------------------------------------------
--------------
----- --------
.100
The first reduction was 0.5 cent a pound and was announced with,
and made a part of, the total action in approving the Jones-Costigan
Act of May 9, 1934. In this action the tariff on Cuban sugar was
reduced to 1.5 cents a pound, effective June 8, 1934. The action
was by Presidential proclamation under the "flexible" tariff provisions
of the Tariff Act of 1930 (table 13).
Subsequently, sugar tariff rates were reduced under the Reciprocal
Trade Agreements Act of 1934 and its periodic extensions and amend-
ments. Under the terms of the exclusive agreement with Cuba con-
cluded in connection with the General Agreement on Tariffs and
Trade, the tariff on Cuban sugar has amounted to 0.5 cent a pound
since 1948, while the full-duty rate has been 0.625 cent a pound since
1951. These reductions in tariff rates were made possible by the
existence of programs under the several sugar acts.
The Philippine quota entered duty free until January 1, 1956, when
it. became subject to 5 percent of the Cuban duty rate. For the
years 1959-61, it was dutiable at 10 percent of the Cuban rate. This
rate will be increased by 3-year periods. (to 20 percent beginning with
the year 1962 and then successively to 40, 60, and 80 percent) to 100
percent of the Cuban duty rate from January 1 to July 3, 1974, and
to the full-duty rate beginning July 4, 1974.
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50 SUGAR ACT AMENDMENTS OF 1962
CHANGES IN EXISTING LAW
In compliance with clause 3 of rule XIII of the Rules of the House
of Representatives, changes in existing law made by the bill are shown
as follows (existing law proposed to be omitted is enclosed in black
brackets, new matter is printed in italics, and existing law in which
no change is proposed is shown in roman):
SUGAR ACT OF 1948, AS AMENDED
TITLE II--QUOTA PROVISTONS
ANNUAL ESTIMATE OF CONSUMPTION IN CONTINENTAL UNITED STATES
SEC. 201. The Secretary shall determine for each calendar year,
beginning with the calendar year 1948, the amount of sugar needed
to meet the requirements of consumers in the continental United
States; such determinations shall be made during the month of
December in each year for the succeeding calendar year (in the case
of the calendar year 1948, during the first ten days thereof) and at
such other times during such calendar year as the Secretary may deem
necessary to meet such requirements. In making such determinations
the Secretary shall use as a basis the quantity of direct-consumption
sugar distributed for consumption, as indicated by official statistics of
the Department of Agriculture, during the twelve-month period ending
October 31 next preceding the calendar year for which the determina-
tion is being made, and shall make allowances for a deficiency or sur-
plus in inventories of sugar, and for changes in consumption because of
changes in population and demand conditions, as computed from sta-
tistics published by agencies of the Federal Government; and, in order
that such determinations shall be made so as to protect the welfare of
consumers and of those engaged in the domestic sugar industry by
providing such supply of sugar as will be consumed at prices which will
not be excessive to consumers and which will fairly and equitably
maintain and protect the welfare of the domestic sugar industry, the
Secretary, in making any such determination, in addition to the con-
sumption, inventory, population, and demand factors above specified
and the level and trend of consumer purchasing power, [shall take into
consideration the relationship between the prices at wholesale for re-
fined sugar that would result from such determination and the general
cost of living in the United States as compared with the relationship
between prices at wholesale for refined sugar and the general cost of
living in the United States obtaining during 1947-49 as indicated
by the Consumers' Price Index as published by the Bureau of Labor
Statistics of the Department of Labor.] shall take into consideration
the relationship between the price for raw sugar that he estimates would
result from such determination and the parity index, as compared with
the relationship between the average price of raw sugar during the three-
year period 1957, 1958, and 1959, and the average of the parity indexes
during such three years, with the view to attaining generally stable
domestic sugar prices that will carry out over the long term the price
objective previously set forth in this section. The term "parity index"
as used herein shall mean such index as determined under section 301
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of the Agricultural Adjustment Act of 1938, as amended, and as published
monthly by the United States Department of Agriculture. In order
that the regulation of commerce provided by this Act shall not result in
excessive prices to consumers, the Secretary shall make such additional
allowances as he deems necessary in the amount of sugar determined to
be needed to meet requirements of consumers.
PRORATION OF QUOTAS
SEC. 202. [Whenever a determination is made, pursuant to section
201, of the amount of sugar needed to meet the requirements of con-
sumers, the Secretary shall establish quotas, or revise existing quotas-
[(a) (1) For domestic sugar-producing areas, by apportioning
among such areas four million four hundred and forty-four thousand
short tons, raw value, as follows : Short tons,
raw value
[Area
Domestic beet sugar-----------------------------------------= - 1,800,000
Mainland cane sugar------------------------------------------- 500,000
Hawaii------------------------------------------------------- 1,052,000
Puerto Rico--------------------------------------------------- 1,080,000
12, 12,000
Virgin Islands------------------------- ---------------
[(2) :Co the above total of four million four hundred forty-four
thousand short tons, raw value, there shall be added an amount equal
to 55 per centum of the amount by which the Secretary's determina-
tion of requirements of consumers in the continental United States
for the calendar year exceeds eight million three hundred and fifty
thousand short tons, raw value. Such additional amount shall be
apportioned among and added to the quotas established under para-
graph (1) of this subsection for such domestic sugar-producing areas,
respectively, as follows: (A) The first one hundred sixty-five thousand
short tons, raw value, or any part thereof, by which quotas for the
domestic areas are so increased shall be apportioned 51.5 per centum
to the domestic beet sugar area and 48.5 per centum to the mainland
cane sugar area; (B) the next twenty thousand short tons, raw value,
or any part thereof, by which such quotas are so increased shall be
apportioned to Puerto Rico; (C) the next three thousand short tons,
raw value, or any part thereof, by which such quotas are so increased
shall be apportioned to the Virgin Islands; (D) any additional amount
shall be apportioned on the basis of the quotas established in para-
graph (1) of this subsection as adjusted by subparagraphs (A),
and (C) of this paragraph (2).
[(b) For the Republic of the Philippines, in the amount of nine
hundred and fifty-two thousand short tons of sugar as specified in
section 211 of the Philippine Trade Act of 1946.
[(c) (1) For the calendar year 1956, for foreign countries other
than the Republic of the Philippines, by prorating among such coun-
tries an amount of sugar, raw value, equal to the amount determined
pursuant to section 201 less the sum of the quotas established pur-
suant to subsections (a) and (b) of this section, on the following ebasis:
[Country 96
Cuba----------------- --- - --- -
Foreign countries other than Cuba and the Republic of the Philippines--- 4
[Ninety-five per centum of the quota for foreign countries other
than Cuba and the Republic of the Philippines shall be prorated
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52 SUGAR ACT AMENDMENTS OF 1982
among such countries on the basis of the average amount imported
from each such country within the quotas established for the years
1948, 1949, and 1950, except that a separate proration need not be
established for any country which entered less than two per centum
of the average importations within the quotas for such years. The
amount of the quota not so prorated may be filled by countries not
receiving separate prorations, but no such country shall enter an
amount pursuant to this subsection in excess of one per centum of the
quota for foreign countries other than Cuba and the Republic of the
Philippines.
[(2) For the calendar year 1957 and for each subsequent calendar
yeah, for foreign countries other than the Republic of the Philippines.
(A) by prorating to Cuba 96 per centum and to other foreign countries 4
per centum of the amount of sugar, raw value, by which eight million
three hundred and fifty thousand short tons, raw value, or such
lesser amount as determined pursuant to section 201 exceeds the sum
of four million four hundred and forty-four thousand short tons,
raw value, and the quota established pursuant to subsection (d) of
this section; and (B) by prorating 45 per centum of the amount of
sugar, raw value, by which the amount determined pursuant to section
201 exceeds the sum of eight million three hundred and fifty thousand
short tons, raw value, as follows:
[Country Per centum
Cuba------------------------------------------------------------ 29.59
Peru------------------------------------------------------------- 4.33
Dominican Republic------------- - 4. 95
----------------------------------------------- 4.95
5.10
Other countries---------------------------------------------------- 1.03
45. 00
The above proration of 1.03 per centum to foreign countries other
than Cuba, the Republic of the Philippines, Peru, the Dominican
Republic, and Mexico shall be apportioned to such other countries
whose average entries within the quotas during 1953 and 1954 ex-
ceeded one thousand short tons, raw value, on the basis of the average
entries within the quotas from each such country for the years 1951,
1952, 1953, and 1954.
[(3) For the calendar year 1957 and for each subsequent calendar
year, the proration of 4 per centum under paragraph (2)(A) of this
subsection for foreign countries other than Cuba and the Republic of
the Philippines shall be apportioned, first, by assigning to each such
foreign country whose average entries within the quotas during the
years 1953 and 1954 were less than one thousand short tons, raw value,
a proration equal to its average entries within the quotas during 1953
and 1954; second, by assigning to each such foreign country whose
average entries within the quotas during 1953 and 1954 were not less
than one thousand nor more than two thousand short tons, raw value,
a proration of three thousand short tons, raw value; third, by assign-
ing to each foreign country whose average entries within the quotas
during 1953 and 1954 were more than two thousand and less than three
thousand short tons, raw value, a proration equal to the average
entries from each such country within the quotas during 1953 and
1954, plus two thousand short tons, raw value; fourth, by assigning
to each foreign country whose average entries within the quotas
during 1953 and 1954 were not less than three thousand nor more than
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SUGAR ACT AMENDMENTS. OF. 1962
ten thousand short tolls, raw value, a1 proration equal to the average
entries from each such country within the quotas during 1.953 and
1954; and, fifth, by prorating the balance of such proration to such
foreign :countries whose average entries within the quotas during 1953
and 1954 exceeded ten thousand short tons, raw value, on the basis
-of. the average entries within the quotas. from each such country for
the years 1951, 1952, 1953, and 1954
[(d) Notwithstanding the other provisions of this title II, the
minimum quota established for Cuba, including increases resulting
from deficits determined pursuant to.section 204(a), shall not be less
than the following:
[(1) 28.6 per centum of the amount of sugar determined
under section 201 when such amount is seven million four hundred
thousand short tons or less; and
[(2) two million one hundred and sixteen thousand short
tons, when. the amount of sugar determined under section 201
is more than seven million four hundred thousand short tons.
The quotas for domestic sugar-producing areas, established pursuant
to,,-the other provisions of this title II, shall be reduced. pro rata by
such amounts as may be required to establish such minimum quota
for Cuba.
[(e) . Whenever in any year any foreign country with a quota or
proration thereof of more than ten , thousand short tons fails to fill
such , quota or proration by more than 10 per centum and at any
time during such year the world price of sugar exceeds the domestic
price,'the quota or proration thereof for such country for subsequent
years shall be reduced by an amount equal to the amount by which
such country failed to fill its quota or proration thereof, unless the
Secretary finds that such failure was. due to crop disaster or force
majeure or finds that such.reduction would be contrary to the objec-
tives of this Act. Any reduction hereunder shall be prorated in the
same manner as deficits are prorated under section 204.] Whenever
a determination is made, pursuant to section 201, of the amount of sugar
needed to meet the requirements of consumers, the Secretary shall establish
quotas, or revise existing quotas
(a) (1) for domestic. sugar-producing areas, by apportioning among
such areas five million eight hundred and ten thousand short tons,
raw value, as follows:
Area
raw value
Domestic beet sugar--------------------------------------
2,650,000
0
Mainland cane sugar--------------------------------------
895,00
Hawaii--------------------------------------------------
1,110,000
Puerto Rico----------------------------------------------
1,140,000
Virgin Islands--------------------------------------------
15,000
Total----------------------------------------------
5,810,000
(2) (A) To the above total of five million eight hundred and ten
thousand short tons, raw value, there shall be added an amount equal
to 63 per centum of the amount by which the Secretary's determination
of requirements of consumers in the continental United States for
the calendar year exceeds nine million seven hundred thousand short
tons, raw value. Such additional amount shall be apportioned
between the domestic beet sugar area and the mainland cane sugar
area on the basis of the quotas for such areas established under para-
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54 SUGAR ACT AMENDMENTS OF 1962
graph (1) of this subsection and the amounts so apportioned shall
be added to the quotas for such areas;
(B) Whenever the production of sugar in Hawaii, Puerto Rico,
or in the Virgin Islands in any year subsequent to 1961 results in
there being available for marketing in the continental United States
in any year sugar in excess of the quota for such area for such year
established under paragraph. (1) of this subsection, the quota for the
immediately following year established for such area under paragraph
(1) of this subsection shall be increased to the extent of such excess
production: Provided, That in no event shall the quota for Hawaii,
Puerto Rico, or the Virgin Islands, as so increased, exceed the quota
which would have been established for such area at the same level of
consumption requirements under the provisions of section 202(a)
of the Sugar Act of 1948, as amended, in eject immediately prior
to the date of enactment of the Sugar Act Amendments of 1962;
(b) for the Republic of the Philippines, in the amount of one million
and fifty thousand short tons raw value of sugar.
(c) (1) for the six-month period ending December 31, 1962, for
foreign countries other than the Republic of the Philippines an
amount of sugar, raw value, equal to the amount determined pursuant
to section 201 less the sum of (i) the quotas established pursuant to
subsections (a) and (b) of this section, (ii) the amount of nonquota
purchase sugar authorized for importation between January 1 and
June 80, 1962, inclusive, pursuant to Sugar Regulation 820, and
(iii) the quotas for foreign countries other than the Republic of the
Philippines established by Sugar Regulation 811 for the six-month
period ending June 30, 1962;
(2) for the calendar year 1963 and for each subsequent year, for
foreign countries other than the Republic of the Philippines, an
amount of sugar, raw value, equal to the amount determined pursuant
to section 201 less the sum of the quotas established pursuant to
subsections (a) and (b) of this section;
(3) (A) the quotas for foreign countries other than the Republic
q f the Philippines determined under paragraphs (1) and (2) of this
subsection, less six hundred and sixty-seven short tons, raw value,
for 1962 and less thirteen hundred and thirty-two short tons, raw
value,' for 1963 and each year thereafter, shall be prorated among
such countries on the following basis:
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SUGAR ACT AMENDMENTS OF 1962 55
Country
Per
Cengum
Cuba-------------------------------------------------------
52.84
Peru-------------------------------------------------------
7.04
Dominican Republic------------------------------------------
7.04
Mexico------------------------------------------------------
7.04
Brazil------------------------------------------------------
6.69
British West Indies-------------------------------------------
3.52
Australia---------------------------------------------------
1.76
Republic of China ------------------------------------------
1.58
French West Indies-------------------------------------------
1.41
Colombia----------------------------------------------------
1.23
Nicaragua---------------------------------------------------
1.06
Costa Rica--------------------------------------------------
1.06
India-------------------------------------------------------
1.06
Ecuador-----------------------------------------------------
1.06
Haiti-------------------------------------------------------.
0.88
Guatemala---------------------------------------------------
0.70
Argentina-----------------------------------------------------
0.70
South Africa---------------------------------------------
0.70
Panama----------------------------------------------------
. 0.53
El Salvador--------------------------------------------------
0.35
Paraguay---------------------------------------------------
0.35
British Honduras ---------------------------------------------
0.35
Fiji Islands-------------------------------------------------
0.35
Netherlands-------------------------------------------------
0.35
Mauritius ----------------------------------------------------
0.35
Total-------------------------------------------------
100.00
(B) for the 6-month period ending December 31, 1962, Canada,
United Kingdom, Belgium, and Hong Kong shall be permitted to
import into the continental United States the amount of sugar
allocated to each in Sugar Regulation 811, issued December 11, 1961
(26 F.R. 11963). For the calendar year 1963 and for each subse-
quent year, Canada, United Kingdom, Belgium, and Hong Kong
shall be permitted to import into the continental United States a total
of thirteen hundred and thirty-two short tons of sugar, raw value,
which amount shall be allocated to such countries iv amounts as
specified in Sugar Regulation 811, as amended, issued March 31,
1961 (26 F.R. ,2774);
(4) notwithstanding the provisions of paragraph (3) of this sub-
section, whenever the United States is not in diplomatic relations
with any country named in paragraph (3) of this subsection and
during such period after resumption of diplomatic relations with
such country as the Secretary determines is required to permit an
orderly adjustment in the channels of commerce for sugar, the pro-
ration or allocation provided for in paragraph (3) of this subsection
shall not be made to such country, and a quantity of sugar equal to
the proration or allocation which would have been made but for the
provisions of this paragraph shall be authorized for purchase and
importation from foreign countries, except that all or any part of
such quantity need not be purchased from any country with which
the United States is not in diplomatic relations, or from any country
designated by the President whenever he finds and proclaims that
such action is required in the national interest. J1'or the period
ending December 31, 1962 and for the calendar year 1963, any
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56 SUGAR ACT AMENDMENTS OF 1962
such quantity as is authorized for purchase and importation under
this paragraph (4) shall be allocated on the following basis:
(!) Country Per eenturn
Republic of the Philippines-------------------------------------
10
Peru--------------------------------------------------------
10
Dominican Republic-------------------------------------------
10
Mexico-------------------------------------------------------
10
Brazil-------------------------------------------------------
10
British West Indies--------------------------------------------
10
Australia----------------------------------------------------
10
Republic of China ---------------------------------------------
10
India--------------------------------------------------------
6.67
South Africa--------------------------------------------------
6.67
Maurztius----------------------------------------------------
6.66
(ii) the Secretary shall from time to time determine whether, in
view of the current inventories of sugar, the estimated production of
sugar, and other pertinent factors, countries with purchase authori-
zations under subparagraph (i) of this subsection will fill them at
such times as will meet the sugar requirements of consumers. If the
Secretary determines that any country will not so fill its purchase
authorization at such time as will meet the sugar requirements of
consumers, he shall cancel it to the extent that he determines it will
not be so filled, and he shall authorize for purchase and importation
into the United States a quantity of sugar equal to the amount of
the purchase authorization so canceled by revising the authoriza-
tions for purchase and importation from the other foreign countries
named in subparagraph (i) of this subsection by prorating such
quantity among them. If the Secretary determines that any such
country is unable to fill its revised authorization at such times as
will meet the sugar requirements of consumers, he shall authorize
the purchase and importation of such unfilled quantity from such
foreign countries as he determines will meet the sugar requirements
of consumers.
(5) sugar authorized for purchase pursuant to paragraph (I) of
this subsection shall be raw sugar, except that if the Secretary deter-
mines that the total quantity is not reasonably available as raw sugar
from the countries either named or determined by the Secretary under
paragraph (4) of this subsection, he may authorize for purchase for
direct consumption from such countries such part of such quantity
of sugar as he determines may be required to meet the requirements of
consumers in the United States;
(6) sugar shall not be authorized for purchase pursuant to para-
raph (4) of this subsection from any foreign country which imports
sugar unless, in the preceding and current calendar year, its aggre-
gate exports of sugar to countries other than the United States equal
or exceed its aggregate imports of sugar;
(d) whenever in any year any foreign country with a quota or
proration thereof of more than ten. thousand short tons, raw value
fails to fill such quota or proration by more than ten per centum anj
at any time during such year the world price of sugar exceeds the
domestic price, the quota or proration thereof for such country for
subsequent years shall be reduced by an amount equal to the amount
by which such country failed to fill its quota or proration thereof,
unless the Secretary finds that such failure was due to crop disaster
or, force majeure or finds that such reduction would be contrary to the
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SUGAR ACT AMENDMENTS OF 1962
objectives of this Act. Any reduction hereunder shall be prorated in
the same manner as deficits are prorated under section 2011.
(e) if a foreign country imports sugar, it may not export sugar
to the United States to fill its quota or proration thereof for any
year unless, in both the preceding and current calendar years, its
aggregate exports of sugar to countries other than the United States
equal or exceed its aggregate imports of sugar. If sugar is exported
to the United States from any foreign country in any year in violation
of this subsection (e), the quota or proration thereof for such foreign
country for subsequent years shall be reduced by an amount equal
to three times the lesser of (i) the amount of such country's excess of
imports of sugar over its exports of sugar to countries other than the
United States during the preceding or current calendar year, in
whichever year an excess or the larger excess occurs, or (ii) the
amount of sugar exported to the United States by such country to
fill its quota or proration thereof during the calendar year in which
the violation of this subsection (e) occurred.
(f) the quota or proration thereof or purchase authorization
established for any foreign country may be filled only with sugar
produced from sugarbeets or sugarcane grown in such country.
PRORATION OF QUOTA DEFICITS
SEC. 204. [(a) The Secretary shall from time to time determine
whether, in view of the current inventories of sugar, the estimated
production from the acreage of sugarcane or sugarbeets planted, the
normal marketings within a calendar year of new-crop sugar, and
other pertinent factors, any area will be unable to market the quota
for such area. If the Secretary finds that any domestic area or Cuba
will be unable to market the quota for such area, lie shall revise the
quotas for the domestic areas and Cuba by prorating an amount of
sugar equal to the deficit so determined to the other such areas on
the basis of the quotas then in effect: Provided, That any deficit in
any domestic sugar-producing area occurring by reason of inability
to market that part of the quota for such area allotted under the pro-
visions of section 202(a)(2) shall first be prorated to other domestic
areas on the basis of the quotas then in effect. If the Secretary finds
that the Republic of the Philippines will be unable to market the
quota for such area, he shall revise the quotas for Cuba and foreign
countries other than Cuba and the Republic of the Philippines by
prorating an amount of sugar equal to the deficit so determined, as
follows:
[To Cuba, 96 per centum; and
[To foreign countries other than Cuba and the Republic of the
Philippines, 4 per centum.
[If the Secretary finds that foreign countries other than Cuba and
the Republic of the Philippines cannot fill the quota for such area, lie
shall increase the quota for Cuba by an amount equal to the. deficit.
[Whenever the Secretary finds that any area will be unable to fill
its proration of any such deficit, lie may apportion such unfilled
amount on such basis and to such areas as he determines is required
to fill such deficit; except that in the case of proration of any such
deficit in any domestic sugar-producing area occurring by reason of
inability to market that part of the quota for such area allotted
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SUGAR ACT AMENDMENTS OF 1962
under and by reason of section 202(a) (2), the Secretary shall appor-
tion the unfilled amount on such basis and to such other domestic
areas as he determines is required to fill such deficit, and if he finds
that no domestic area will be able to supply such unfilled amount, he
shall add it to the quota for Cuba.
[(b) Whenever the Secretary finds that any country will be unable
to fill the proration to such country of the quota for foreign countries
other than Cuba and the Republic of the Philippines established
under section 202(c), or that any part of such proration has not
been filled on September 1 of the calendar year, he may apportion
such unfilled amount on such basis and to such countries as he deter-
mines is required to fill such proration.
[(c) The quota or applicable proration for any domestic area, the
Republic of the Philippines, Cuba, or other foreign countries as
established under the provisions of section 202 shall not be reduced
by reason of any determination of a deficit existing in any calendar
year under the provisions of subsections (a) and (b) of this section.]
(a) The Secretary shall from time to time determine whether, in view of
the current inventories of sugar, the estimated production from the acreage
of sugarcane or sugarbeets planted, the normal marketings within a
calendar year of new-crop sugar, and other pertinent factors, any area
or country will be unable to market the quota or proration for such area or
country. If the Secretary determines that any domestic area or foreign
country will be unable to market the quota or proration for such area or
country, he shall revise the quota, for the Republic of the Philippines and
the proration ,for foreign countries named in section 202(c) (3) (A) by
prorating an amount of sugar equal to the deficit so determined to such
countries without a deficit on the basis of the quota for the Republic of the
Philippines and the prorations for such countries then in effect: Provided,
That no part of any such deficit shall be prorated to any country not in
diplomatic relations with the United States. If the Secretary determines
that any.foreign country will be unable to_fill its share of any deficit deter-
mined under this section, he shall apportion such unfilled amount on
such basis and to the Republic of the Philippines and such other foreign
countries named in section 202(c) (3) (A) as he determines is required to
fill any such deficit: Provided, That no such apportionment, shall-be made.
to any foreign country not in diplomatic relations with the United States.
If the Secretary determines that neither the Republic of the Philippines
nor the countries named in section 202(c) (3) (A) can fill all of any such
deficit whenever the provisions of section 202(c) (4) apply, hhe' shall add
such unfilled amount to the quantity of sugar which may be purchased
pursuant to section 202(c)(4), and whenever section 202(c)(4) does not
apply he shall apportion such unfilled amount on such basis and to such
foreign countries in diplomatic relations with the United States as he
determines is required to fill such deficit.
(b) The quota established for any domestic area or the Republic of the
Philippines under section 202 shall not be reduced by reason of any
determination of a deficit existing in any calendar year under subsection
(a) of this section.
ALLOTMENTS OF QUOTAS OR PRORATIONS
SEC. 205. (a) Whenever the Secretary finds that the allotment of
any quota., or proration thereof, established for any area pursuant to
the provisions of this Act, is necessary to assure an orderly and ade-
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quate flow of sugar or liquid sugar in the channels of interstate or
foreign commerce, or to prven t disorderly marketing or importation
of sugar or liquid sugar, or to maintain a continuous and stable supply
of sugar or liquid sugar, or to afford all interested persons an equitable
opportunity to market sugar or liquid sugar within any area's quota,
after such hearing and upon such notice as he may by regulations
prescribe, he shall make allotments of such quota or proration thereof
by allotting to persons who market or import sugar or liquid sugar,
for such periods as he may designate, the quantities of sugar or liquid
sugar which each such person may market in continental United
States, Hawaii, or Puerto Rico, or may import or bring into con-
tinental. United States, for consumption therein. Allotments shall
be made in such manner and in such amounts as to provide a fair,
efficient, and equitable distribution of such quota or proration thereof,
by taking into consideration the processings of sugar or liquid sugar
from sugarbeets or sugarcane, limited in any year when proportionate
shares were in effect to processings to which proportionate shares, deter-
mined pursuant to the provisions of subsection (b) of section 302,
pertained; the past marketings or importations of each such person;
and the ability of such person to market or import that portion of
such quota or proration thereof allotted to him. In making such
allotments, the Secretary may also take into consideration and make
due allowance for the adverse effect of drought, storm, flood, freeze,
disease, insects, or other similar abnormal and uncontrollable condi-
tions seriously and broadly affecting any general area served by the
factory or factories of such person. The Secretary may also, upon
such hearing and notice as he may by regulations prescribe, revise or
amend any such allotment upon the same basis as the initial allotment
was made.
SEC. 206. [Subject to the provisions of sections 207 and 408 relating
to the suspension of quotas, sugar quotas shall be established pursuant
to this Act for the calendar year 1948 within ten days after effective
date of this Act.] The sugar or liquid sugar in any product or mixture,
which the Secretary determines is the same or essentially the same in
composition and use as a sugar-containing product or mixture which was
imported into the United States during any three or more of the five years
prior to 1960 without being subject to a quota under this Act, shall not
be subject to the quota and other provisions of this Act, unless the Secre-
tary determines that the actual or prospective importation or bringing into
the United States or Puerto Rico of such sugar-containing product or
mixture will substantially interfere with the attainment of the objectives
of this Act: Provided, That the sugar and liquid sugar in any other
product or mixture imported or brought into the United States or Puerto
Rico shall be subject to the quota and other provisions of this Act unless
the Secretary determines that the actual or prospective importation or
bringing in of the sugar-containing product or mixture will not substan-
tially interfere with the attainment of the objectives of this Act. In deter-
mining whether the actual or prospective importation or bringing into the
United States or Puerto Rico of any sugar-containing product or mixture
will or will not substantially interfere with the attainment of the objectives
of this Act, the Secretary shall take into consideration the total sugar
content of the product or mixture in relation to other ingredients or to the
sugar content of other products or mixtures for similar use, the costs of
the mixture in relation to the costs of its ingredients for use in the United
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SUGAR ACT AMENDMENTS OF 1962
States or Puerto Rico, the present or prospective volume of importations
relative to past importations, and other pertinent information which will
assist him in making such determination. Determinations by-the-Secre-
tary that do not subject sugar or liquid sugar in a product or rniLeture to a
quota, may be made pursuant to this section without regard to the rule-
making requirements of section 4 of the Administrative Procedure Act,
and by addressing such determinations in writing to named persons and
serving the same upon them by mail. If the Secretary has reason to
believe it likely that the sugar or liquid sugar in any product or mixture
will be subject to a quota under the provisions of this section, he shall make
any determination provided for in this section with respect to such prod-
uct or mixture in conformity with the rulemaking requirements of section 4
q f the Administrative Procedure Act.
AMOUNT OF QUOTA TO BE FILLED BY DIRECT-CONSUMPTION SUGAR
SEC. 207. [(a) Not more than twenty-nine thousand six hundred
and sixteen short tons, raw value, of the quota for Hawaii for any
calendar year, plus an amount equal to the same percentage of twenty-
nine thousand six hundred and sixteen short tons, raw value, that the
increase in the quota for Hawaii under section 202 is one million
fifty-two thousand short tons, raw value, may be filled by direct-
consumption sugar.
[(b) Not more than one hundred and twenty-six thousand and
thirty-three short tons, raw value, of the quota for Puerto Rico for
any calendar year may be filled by direct-consumption sugar which
shall be principally of crystalline structure, plus an amount equal
to the same percentage of one hundred twenty-six thousand and
thirty-three short tons, raw value, that the increase in the. quota for
Puerto Rico under section 202 is of one million eighty thousand short
tons, raw value, which latter amount may be filled by direct-con-
sumption sugar whether or not principally of crystalline structure.
[(c) None of the quota for the Virgin Islands for any calendar
year may be filled by direct-consumption sugar.
[(d) Not more than fifty-six thousand short tons of sugar of the
quota for the Republic of the Philippines for any calendar year may
be filled by direct-consumption sugar as specified in section 211 of
the Philippine Trade Act of 1946.
[(e) Not more than three hundred and seventy-five tho tsand
short tons, raw value, of the quota for Cuba for any calendar year
may be filled by direct-consumption sugar.
[(f) This section shall not apply with respect to the quotas estab=
lisped under section 203 for marketing for local consumption in
Hawaii and Puerto Rico.
[(g) The direct-consumption portions of the quotas established
pursuant to this section, and the enforcement provisions of title II
applicable thereto, shall continue in effect and shall not be-subject to
suspension pursuant to the provisions of section 408 of this Act unless
the President acting thereunder specifically finds and proclaims that a
national economic or other emergency exists with respect to sugar or
liquid sugar which requires the suspension of direct-consumption
portions of the quotas.
[(h) (1) For the calendar year 1956, the quota for foreign countries
other than Cuba and the Republic of the Philippines may be filled
by direct-consumption sugar only to the extent of 1.36 per centurn
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of the amount of sugar determined pursuant to section 201 less the sum
of the quotas established in subsections (a.) and (b) of section 202:
Provided, That each such country shall be permitted to enter an amount
of direct-consumption sugar not less than the average amount entered
by it during the years 1948, 1949, and 1950.
[(2) For the calendar year 1957 and each subsequent calendar
year, the quota for foreign countries other than Cuba and the Repub-
lic of the Philippines may be filled by direct-consumption sugar to the
extent of 1.36 per centum of the amount of sugar determined pursuant
to section 201 less the sum of the quotas established in subsections
(a) and (b) of section 202: Provided, That such limitation shall not
apply to countries receiving prorations under section 202(c) of seven
thousand short tons or less. The direct-consumption portion of such
quota which is subject to the 1.36 per centum limitation referred to
above shall be prorated to countries which receive prorations under
section 202(c) of more than seven thousand short tons on the basis of
average imports of direct-consumption sugar within the quota for the
years 1951, 1952 1953, and 1954.] (a) The quota for Hawaii established
under section 20,e for any calendar year may be filled by direct-consump-
tion sugar not to exceed an amount equal to 0.342 per centum of the Secre-
tary's determination for such year issued pursuant to section 201.
(b) The quota for Puerto Rico established under section 202 for any
calendar year may be filled by direct-consumption sugar not to exceed an
amount equal to 1.5 per centum of the Secretary's determination for such
year issued pursuant to section 201: Provided, That one hundred and
twenty-six thousand and thirty-three short tons, raw value, of such direct-
consumption sugar shall be principally of crystalline structure.
(c) None of the quota for the Virgin Islands for any calendar year may
be filled by direct-consumption sugar.
(d) Not more than fifty-six thousand short tons of sugar of the quota
for the Republic of the Philippines for any calendar year may be filled by
direct-consumption sugar as provided under section 201 of the Philippine
Trade Agreement Revision Act of 1955.
(e) (1) None of the proration established for Cuba under section
202 (c) (3) for any calendar year and none of the deficit prorations and
apportionments for Cuba established under section 204 (a) may be filled
by direct-consumption sugar.
(2) The proration or allocation established for each foreign country
which receives a proration or allocation of twenty thousand short tons, raw
value, or less under section 202(c) (3), may be filled by direct-consumption
sugar to the extent of the average amount of direct-consumption sugar
entered by such country during the years 1957, 1958 and 1959. None
of the proration or allocation established for each foreign country which
receives a proration or allocation of more than twenty thousand short tons,
raw value, or less under section 202 (c) (3), may be filled by direct-con-
sumption sugar. None of the deficit prorations and apportionments for
foreign countries established under section 204 (a) may be filled by direct-
consumption sugar.
(f) This section shall not apply with respect to the quotas established'
under section 203 for marketing for local consumption in Hawaii and
Puerto Rico.
(g) The direct-consumption portions of the quotas established pursuant
to this section, and the enforcement provisions of title II applicable thereto,
shall continue in effect and shall not be subject to suspension pursuant
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to the provisions of section 408 of this Act unless the President acting
thereunder specifically finds and proclaims that a national economic or
other emergency exists with respect to sugar or liquid sugar which requires
the suspension of direct-consumption portions of the quotas.
SEC. 208. [Quotas for liquid sugar for foreign countries for each
calendar year are hereby established as follows:
In terms of wine gallons
of 72 per centum total
[ Country sugar content
Cuba-------------------------------------------------------
7,970,558
Dominican Republic------------------------------------------
830,894
British West Indies-------------------------------------------
300,000
Other foreign countries----------------------------------------
0]
A quota for liquid sugar for foreign countries for each calendar year is
hereby established as follows: two million gallons of sirup of cane juice
of the type of Barbados molasses, limited to liquid sugar containing sol-
uble nonsugar solids (excluding any foreign substances that may have
been added or developed in the product) of more than 5 per centum of
the total soluble solids, which is not to be used as a component of any
direct-consumption sugar but is to be used as molasses without substantial
modification of its characteristics after importation, except that the
President is authorized to prohibit the importation of liquid sugar from
any foreign country which he shall designate whenever he finds and
proclaims that such action is required by the national interest.
SEC. 209. All persons are hereby prohibited-
(a) From bringing or importing into the continental United States
from Hawaii, Puerto Rico, the Virgin Islands, or foreign countries,
(1) any sugar or liquid sugar after the applicable quota, or the pro-
ration of any such quota, has been filled, or (2) any direct-consumption
sugar after the direct-consumption portion of any such quota or
proration has been filled;
(b) From shipping, transporting, or marketing in interstate com-
merce, or in competition with sugar or liquid sugar shipped, trans-
ported, or marketed in interstate or foreign commerce, any sugar
or liquid sugar produced from sugarbeets or sugarcane grown in either
the domestic-beet-sugar area or the mainland cane-sugar area after
the quota for such area has been filled;
(c) From marketing in either Hawaii or Puerto Rico, for con-
sumption therein, any sugar or liquid sugar after the quota therefor
has been filled;
(d) From exceeding allotments of any quota, direct-consumption
portion of any quota, or proration or allocation of any quota, made
to them pursuant to the provisions of this Act[.];
(e) From bringing or importing into the Virgin Islands for consump-
tion therein, any sugar or liquid sugar produced from sugarcane or sugar-
beets grown in any area other than Puerto Rico, Hawaii, or the continental
United States.
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SEC. 211. (a) [The raw-value equivalent of any sugar or liquid
sugar in any form, including sugar or liquid sugar in manufactured
products, exported from the continental United States under the pro-
visions of section 313 of the Tariff Act of 1930 shall be credited against
any charges which shall have been made in respect to the applicable
quota or proration for the country of origin. The country of origin
of sugar or liquid sugar in respect to which any credit shall be estab-
lished shall be that country in respect to importation from which
drawback of the exported sugar or liquid sugar has been claimed.]
Sugar or liquid sugar entered into the continental United States under
an applicable bond established pursuant to orders or regulations
issued by the Secretary, for the express purpose of subsequently
exporting the equivalent quantity of sugar or liquid sugar as such,
or in manufactured articles, shall not be charged against the appli-
cable quota or proration for the country of origin.
(b) Exportation within the meaning of sections 309 and 313 of the
Tariff Act of 1930 shall be considered to be exportation within the
meaning of this section.
(c) [The quota established for any domestic sugar-producing area
may be filled only with sugar or liquid sugar produced from sugar
beets or sugarcane grown in such area: Provided, however, That any
sugar or liquid sugar admitted free of duty from the Virgin Islands
under the Act of Congress, approved March 3, 1917 (39 Stat. 1133),
may be admitted within the quota for the Virgin Islands.] The
quota established for any domestic sugar-producing area may be filled
only with sugar or liquid sugar produced from sugarbeets or sugarcane
grown in such area.
SEC. 301. The Secretary is authorized to make payments on the
following conditions with respect to sugar or liquid sugar commer-
cially recoverable from the sugar beets or sugarcane grown on a farm
for the extraction of sugar or liquid sugar:
(a) That no child. under the age of fourteen years shall have been
employed or permitted to work on the farm, whether for gain to such
child or any other person, in the production, cultivation, or harvesting
of a crop of sugar beets or sugarcane with respect to which application
for payment is made, except a member of the immediate family of a
person who was the legal owner of not less than 40 per centum of the
crop at the time such work was performed; and that no child between
the ages of fourteen and sixteen years shall have been employed or
permitted to do such work, whether for gain to such child or any other
person, for a longer period than eight hours in any one day, except a
member of the immediate family of a person who was the legal owner
of not less than 40 per centum of the crop at the time such work was
performed. The Secretary is authorized to make payments, not-
withstanding a failure to comply with the conditions provided in this
subsection, but the payments made with respect to any crop shall be
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64 SUGAR ACT AMENDMENTS OF 1962
subject to a deduction of $10 for each child for each day, or a portion
of a day, during which such child was employed or permitted to work
contrary to the foregoing provisions of this subsection.
(b) That there shall not have been marketed (or processed),
except for livestock feed, or for the production of livestock feed, as
determined by the Secretary, an amount (in terms of planted acreage,
weight, or recoverable sugar content) of sugar beets or sugar cane
grown on the farm and used for the production of sugar or liquid sugar
to be marketed in, or so as to compete with or otherwise directly affect
interstate of foreign commerce, [in excess of the proportionate share
for the farm, as determined by the Secretary] in excess of the propor-
tionate share for the farm, if farm proportionate shares are determined
by the Secretary, pursuant to the provisions of section 302, of the total
quantity of sugar beets or sugarcane required to be processed to enable
the area in which such sugar beets or sugarcane are produced to meet
the quota (and provide a normal carryover inventory) as estimated by
the Secretary for such area for the calendar year during which the
larger part of the sugar or liquid sugar from such crop normally would
be marketed.
(c)
SEc. 302. (a) The amount of sugar or liquid sugar with respect to
which payment may be made shall be the amount of sugar or liquid
sugar commercially recoverable, as determined by the Secretary,
from the sugar beets or sugarcane grown on the farm and marketed
(or processed by the producer) not in excess of the proportionate share
[for the farm, as determined by the Secretary] for the farm, if farm
proportionate shares are determined by the Secretary, of the quantity
of sugar beets or sugarcane for the extraction of sugar or liquid sugar
required to be processed to enable the producing area in which the
crop of sugar beets or sugarcane is grown to meet the quota (and
provide a normal carry-over inventory) estimated by the Secretary
for such area for the calendar year during which the larger part of the
sugar or liquid sugar from such crop normally would be marketed.
(b) [In determining the proportionate shares with respect to a
farm, the Secretary may take into consideration the past production
on the farm of sugar beets and sugarcane marketed (or processed)
within the proportionate share for the extraction of sugar or liquid
sugar and the ability to produce such sugar beets or sugarcane, and the
Secretary shall, insofar as practicable, protect the interests of new
producers and small producers and the interests of producers who are
cash tenants, share tenants, adherent planters, or share croppers and of
the producers in any local producing area whose past production has
been adversely, seriously, and generally affected by drought, storm,
flood, freeze, disease, insects, or other similar abnormal and uncon-
trollable conditions.] Whenever the Secretary determines that the
production cf sugar from any crop of sugarbeets or sugarcane will be
greater than the quantity needed to enable the area to meet the quota, and
provide a normal carryover inventory, as estimated by the Secretary for
such area for the calendar year during which the larger part of the sugar
from such crop normally would be marketed, he shall establish propor-
tionate shares for farms in such area as provided in this subsection. In
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SUGAR ACT AMENDMENTS 'OF '1962 65
determining the proportionate shares with respect to a farm, the Secretary
may take into consideration the past production on the farm of sugarbeets
and sugarcane marketed (or processed) for the extraction of sugar or liquid
sugar (within proportionate shares when in effect) and the ability to pro-
duce such sugarbeets or sugarcane. The Secretary may also in lieu of
or in addition to the foregoing factors, take into consideration with respect
to the domestic beet sugar area the sugarbeet production history of the
person who was a farm operator in the base period, in establishing farm
proportionate shares in any State or substantial portion thereof in which
the Secretary determines that sugarbeet production is organized generally
around persons rather than units of land, other than a State or substan-
tial portion thereof wherein personal sugarbeet production history of farm
operators was not used generally prior to 1962 in establishing farm pro-
portionate shares. In establishing proportionate shares for farms in the
domestic beet sugar area, the Secretary may first allocate to States (except
acreage reserved) the total acreage required to enable the area to meet its
quota and provide a normal carryover inventory (hereinafter referred to
as the `national sugarbeet acreage requirement') on the basis of the
acreage history of sugarbeet production and the ability to produce sugar-
beets for extraction of sugar in each State. In order to make available
acreage for growth and expansion of the beet sugar industry, the Secretary,
in addition to protecting the interest of new and small producers by regu-
lations generally similar to those heretofore promulgated by him pursuant
to this Act, shall reserve each year from the national sugarbeet acreage
requirement established by him not in excess of the acreage required to
yield 50,000 short tons, raw value, of sugar. The acreage so reserved
shall be distributed on a fair and reasonable basis to farms without regard
to any other acreage allocations to States or areas within States determined
by him. The allocation of the national sugarbeet acreage requirement
to States for sugarbeet production, as well as the distribution of the sugar-
beet acreage reserve, shall be determined by the Secretary after investigation
and notice and opportunity for an informal public hearing. In deter-
mining farm proportionate shares, the Secretary shall, insofar as prac-
ticable, protect the interests of new producers and small producers and the
interest of producers who are cash tenants, share tenants, adherent
planters, or sharecroppers and of the producers in any local producing
area whose past production has been adversely, seriously, and generally
affected by drought, storm, flood, freeze, disease, insects, or other similar
abnormal and uncontrollable conditions. Whenever the Secretary deter-
mines it necessary for the effective administration of this subsection in an
area where farm proportionate shares are established in terms of sugarcane
acreage, he may consider acreage of sugarcane harvested for seed on the
farm in addition to past production of sugarcane for the extraction of
sugar in determining proportionate shares as heretofore provided in this
subsection; and whenever acreage of sugarcane harvested for seed is con-
sidered in determining farm proportionate shares, acreage of sugarcane
harvested for seed shall be included in determining compliance with the
provisions of section 801(b) of this Act, notwithstanding any other pro-
visions of section 801(b). For the purposes of establishing propor-
tionate shares hereunder and in order to encourage wise use of land
resources, foster greater diversification of agricultural production, and
promote the conservation of soil and water resources in Puerto Rico,
the Secretary, on application of any owner of a farm in Puerto Rico,
is, ,hereby authorized, whenever he determines it to be in the public
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interest and to facilitate the sale of rental of land for other productive
purposes, to transfer the sugarcane production record for any parcel or
parcels of land in Puerto Rico owned by the applicant to any other
parcel or parcels of land owned by such applicant in Puerto Rico.
(c) * * *
SEC. 408. (a) Whenever pursuant to the provisions of this Act
the President finds and proclaims that a national economic or other
emergency exists with respect to sugar or liquid sugar, he shall by
proclamation suspend the operation, except as provided in section 207
of this Act, of all the provisions of title II above, and, thereafter, the
operation of such title shall continue in suspense until the President
finds and proclaims that the facts which occasioned such suspension
no longer exist. The Secretary shall make such investigations and
reports thereon to the President as may be necessary to aid him in
carrying out the provisions of this section.
(b) [Notwithstanding the provisions of title 11 of this Act, for the
period ending June 30, 1962:
[(1) The President shall determine notwithstanding any other
provisions of title IT,, the quota for Cuba for the period. ending
June 30, 1962, in such amount or amounts as he shall find from
time to time to be in the national interest: Provided, however,
That in no event shall such quota at any time exceed such amount
as would be provided for Cuba under the terms of title II in the
absence of the amendments made herein, and such determinations
shall become effective immediately upon publication in the Fed-
eral Register of the President's proclamation thereof:
[(2) For the purposes of meeting the requirements of consum-
ers in the United States, the President is thereafter authorized
to cause or permit to be brought or imported into or marketed in
the United States, at such times and from such sources, including
any country whose quota has been so reduced, and subject to
such terms and conditions as lie deems appropriate under the
prevailing circumstances, a quantity of sugar, not in excess of the
suns of any reductions in quotas made pursuant to this subsec-
tion: Provided, however, That any part of such quantity equiva-
lent, to the proration of domestic deficits to the country whose
quota has been reduced may be allocated to domestic areas and
the remainder of such quantity (plus any part of such allocation
that domestic areas are unable to fill) shall be apportioned in raw
sugar as follows:
[(i) There shall first be purchased from other foreign
countries for which quotas or prorations thereof of not less
than three thousand or more than ten thousand short tons,
raw value, are provided in section 202(c), such quantities of
raw sugar as are required to permit importation in such
calendar year of a total of ten thousand short tons, raw
value, from such country;
[(ii) There shall next be purchased from the Republic of
the Philippines 15 per centum of the remainder of such
importation;
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SUGAR ACT AMENDMENTS OF 1962 67
[(iii) The balance, including any unfilled balances from
allocations already provided, shall be purchased from for-
eign countries having quotas under section 202(c), other
than those provided for in the preceding subparagraph (i),
in amounts prorated according to the quotas established
under section 202(c); except that any amount which would
be purchased from any country with which the United
States is not in diplomatic relations need not be purchased:
Provided, That if additional amounts of sugar, including
any amounts which would otherwise be purchased from any
such country with which the United States is not in diplo-
matic relations, are required the President may authorize
the purchase of such amounts from any foreign countries,
without regard to allocation except that special consideration
shall be given to countries of the Western Hemisphere and
to those countries purchasing United States agricultural
commodities;
[(3) If the President finds that raw sugar is not reasonably
available, he may, as provided in (2) above, cause or permit to
be imported such quantity of sugar in the form of direct-consump-
tion sugar as may be required.] In the event the President, in
his discretion, determines that any foreign country having a quota
or receiving any authorization under this Act to import sugar into.
the United States, has been or is allocating the distribution of such
quota or authorization within that country so as to discriminate
against citizens of the United States, he shall suspend the quota or
other authorization of that country until such time as he has received
assurances, satisfactory to him, that the discrimination will not be
continued. Any quantity so suspended shall be authorized for pur-
chase in accordance with the provisions of section 202(c)(4), or
apportioned in accordance with section 204(a) whichever procedure
is applicable.
(c) In any case in which the President determines that a nation or a
political subdivision thereof has hereafter (1) nationalized, expropriated,
or otherwise seized the ownership or control of the property of United
States citizens or (2) imposed upon or enforced against such property or
the owners thereof discriminatory taxes or other exactions, or restrictive
maintenance or operational conditions not imposed or enforced with re-
spect to property of a like nature owned or operated by its own nationals
or the nationals of any government other than the Government of the
United States, and has _failed within six months following the taking of'
action in either of such categories to take steps determined by the Presi-
dent to be appropriate and adequate to remedy such situation and to dis-
charge its obligations under international law toward such citizens, in-
cluding the prompt payment to the owner or owners of such property so
nationalized, expropriated, or otherwise seized, or to arrange, with the
agreement of the parties concerned, for submitting the question in dispute
to arbitration or conciliation in accordance with procedures under which,
a final and binding decision or settlement will be reached and full pay-
ment or arrangements with the owners for such payment made within
twelve months following such submission, the President shall, unless he
determines such suspension to be inconsistent with the national interest,
suspend any quota, proration of quota, or authorization to purchase and
import sugar under this Act of such nation until he is satisfied that appro-
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68 SUGAR ACT AMENDMENTS OF 1962
priate steps are being taken. Any quantity so suspended shall be author-
ized for purchase in accordance with the provisions of section 202 (c) (4),
or apportioned in accordance with section 204(a) whichever procedure is
applicable.
SEC. 412. The powers vested in the Secretary under this Act shall
terminate on [June 30], December 31, [1962] 1966, except that the
Secretary shall have power to make payments under title III under
programs applicable to the crop year [1962] 1966 and previous crop
years.
[EFFECTIVE DATE
[SEC. 413. The provisions of this Act, except where an earlier
effective date is provided for herein, shall become effective January 1,
1948. As provided in section 513 of the Sugar Act of 1937, the powers
vested in the Secretary under that Act shall terminate on December 31,
1947, except that the Secretary shall have power to make payments
under title III of that Act under programs thereunder applicable to
the crop year 1947 and previous crop years.]
INTERNAL REVENUE CODE OF 1954
CHAPTER 37
Subchapter A-Sugar
SEC. 4501. IMPOSITION OF TAX.
(a) GENERAL.-There is hereby imposed upon manufactured sugar
manufactured in the United States, a tax, to be paid by the manu-
facturer at the following rates:
(1) on all manufactured sugar testing by the polariscope 92
sugar degrees, 0.465 cent per pound, and, for each additional
sugar degree shown by the polariscopic test, 0.00875 cent per
pound additional, and fractions of a degree in proportion;
(2) on all manufactured sugar testing by the polariscope less
than 92 sugar degrees, 0.5144 cent per pound of the total sugars
therein.
The manufacturer shall pay the tax with respect to manufactured
sugar (1) which has been sold, or used in the production of other
articles, by the manufacturer during the preceding month (if the tax
has not already been paid) and (2) which has not been so sold or used
within 12 months ending during the preceding calendar month, after
it was manufactured (if the tax has not already been paid). For the
purpose of determining whether sugar has been sold or used within 12
months after it was manufactured, sugar shall be considered to have
been sold or used in the order in which it was manufactured.
(b) IMPORT TAX.-In addition to any other tax or duty imposed
by law, there is hereby imposed, under such regulations as the Secre-
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SUGAR ACT AMENDMENTS OF
tary or his delegate shall prescribe, a tax upon articles imported or
brought into the United States as follows:
(1) on all manufactured sugar testing by the polariscope 92
sugar degrees, 0.465 cent per pound, and, for each additional
sugar degree shown by the polariscopic test, 0.00875 cent per
pound additional, and fractions of a degree in proportion;
(2) on all manufactured sugar testing by the polariscope less
than 92 sugar degrees, 0.5144 cent per pound of the total sugars
therein ;
(3) on all articles composed in chief value of manufactured
sugar, 0.5144 cent per pound of the total sugars therein.
(c) TERMINATION OF TAX.-No tax shall be imposed under this
subchapter on the manufacture, use, or importation of sugar or articles
composed in chief value of sugar after [December 31, 1962] June 30,
1967. Notwithstanding the provisions of subsection (a) or (b), no
tax shall be imposed under this subchapter with respect to unsold.
sugar held by a manufacturer on [December 31, 1962] June 30, 1967,
or with respect to sugar or articles composed in chief value of sugar
held in customs custody or control on such date.
* * * * *
* *
CHAPTER 65-ABATEMENTS, CREDITS, AND REFUNDS
SEC. 6412. FLOOR STOCKS REFUNDS.
* * * * *
*
(d) SUGAR.-With respect to any sugar or articles composed in
chief value of sugar upon which tax imposed under section 4501(b)~
has been paid and which, on [December 31, 1962] June 30, 1967, are
held by the importer and intended for sale or other disposition,
there shall be refunded. (without interest) to such importer, subject
to such regulations as may be proscribed by the Secretary or his
delegate, an amount equal to the tax paid with respect to such sugar-
or articles composed in chief value of sugar, if claim for such refund
is filed with the Secretary or his delegate on or before [March 31,.
1963] September 30, 1967.
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OPPOSING VIEW OF PAUL FINDLEY
,The Sugar Act is an example of supply management, the Govern-
ment-control approach which has already been established in varying
degrees in tobacco, `cotton, rice, peanuts, and wheat. It is now being
advocated by the administration for other commodities, notably feed
grains.
Supply management can take various forms. Of these, our sugar
control arrangement should qualify as the prototype for complexity,
extent of Government power, and absence of competitive conditions.
Government control is so deeply imbedded in sugar production and
marketing that even a gap of 1 month between the expiration of the
present Sugar Act and the enactment of a new one is unthinkable.
Supply management in sugar has been succesful in stabilizing
prices and supplies, but this has been achieved at a tremendous cost:
Prices to consumers are artificially high.
Consumers fork over the difference between low world-market
prices and high U.S. prices.
A bureaucracy is established to administer the controls, and this
payroll becomes a fixed burden.
An excise tax of one-half cent per pound is paid by the taxpayer.
This, plus the tariff on imports, finances the program.
Almost nobody is happy. Only the favored few can share the
:sugar-quota pie, and these squabble endlessly because each wants a
bigger cut. This is true of quota countries abroad and the tightly
controlled circle of domestic producers and processors.
Those not cut in on the pie consider themselves unfairly treated.
And so they are.
The right to grow and process acquires an artificial value and be-
comes capitalized into the land and business enterprise. Trade
channels become rigid. This makes it difficult-if not impossible-
ever to cast off supply management in favor of the competitive market-
place system.
Quotas are such rich prizes they are used as instruments of foreign
policy and become tempting plums for influence peddlers.
The $22 million claim against the United States in behalf of the
Dominican Republic is a case in point. The claim arises because the
United States did not pay the full premium price for some of the
sugar it purchased from the Dominican Republic in 1960-61. The
price paid was above the world market, but still not sweet enough to
:satisfy an appetite long accustomed to easy money.
All this may appear to be an unbelievable chamber of horrors to
those who believe in a competitive marketplace.
Be assured, it's a reality, and has been since 1934.
Through successive Sugar Acts (such as the one now before us),
?Congress specifies what countries will share in the sugar pie, how big
each piece will be, and also the price of sugar to consumers.
The piece of the pie set aside for U.S. producers is subdivided by
means of Federal licenses to sugar mills. Each mill contracts for
70
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supplies from individual farmers. Acreage allotments were used
until the last few years, and authority for them remains. This bill
would reimpose allotments beginning next year.
U.S. sugar production has always been artificially supported, as
sugar can be produced more economically in the tropics.
Until 1934, a simple tariff encouraged domestic production. Under
this arrangement, all nations had equal access to the U.S. sugar market,
by the tariff route, and all U.S. farmers had equal access within the
tariff walls.
Under supply management, there is no such thing as equal access
inside or outside the tariff walls. The right to market is apportioned
arbitrarily by the U.S. Government to certain favored nations and
within the United States to certain favored mills.
The supply management approach, whether it be applied to sugar
or to corn, is clearly contrary to the goal of free trade. It also clearly
breeds ill will among nations and heaps new burdens on U.S. consumers
and taxpayers.
Rather than extend this rigid and costly system for another 5 years
and thus make it all the more difficult to return to a marketplace
system, we should begin to phase out quotas, and establish a means of
'
protecting domestic sugar produc
petitive private enterprise system.
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SEPARATE VIEWS OF HON. DELBERT L. LATTA
U.S. taxpayers are presently paying approximately $3 million per
day to store and handle surplus agricultural commodities while at the
same time American farmers are being forced to reduce their produc-
tion and their income.
Sugar is not in surplus and must be imported. Both sugarbeets
and sugarcane can be and are being grown in the United States. The
committee bill grants only a very modest increase in the amount of
sugar being produced in this country while at the same time substan-
tially increasing the quotas of almost every other country (excluding
Cuba) which has in the past furnished the U.S. market with sugar.
In addition, many countries will for the first time be entitled to market
sugar in the United States under the bill. It is interesting to note
that domestic producers of beet sugar according to current estimates
will produce in 1962 a total amount of sugar in excess of the domestic
quota being established under the bill for 1963 and subsequent years.
Rather than give our own farmers and taxpayers a break by granting
a meaningful and substantial increase in the American farmers' share
of the American market, thereby cutting down on the production of
surplus crops while increasing farm income, the majority of the
committee has adopted legislation which will result in only 50,000
tons (approximately 20,000 acres) of the annual growth needs being
allocated to new producers in the whole United States each year.
This 50,000 tons seems less than a gesture when you consider the fact
that our annual domestic consumption of sugar is approximately
9,700,000 tons.
Northwestern Ohio presently has three beet plants and our farmers
have been producing beets for years. It seems very unfair to me to
prevent these farmers and their neighbors from increasing their
production of sugarbeets at a time when they are faced with the
administration program of sharp cuts in the production of wheat, corn,
oats, barley, grain sorghum, or rye.
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SEPARATE VIEWS
REVISION OF SUGAR ACT OF 1948
While we voted to pass the bill out of committee and recognized that
taking all considerations into account, this bill is probably the best
that could be done at this time, we feel it our responsibility-in view
of the sugarbeet growing areas we represent-to point out some of
the bill's shortcomings.
Since the Cuban quota was suspended, we believe beet growers in
the United States have properly expected that a fair proportion of the
sugar formerly supplied by Cuba would accrue to the benefit of our
domestic sugar industry.
We would have preferred that the Cuban reserve be 2 million tons
rather than the 1,500,000 tons. This would preserve a more equitable
balance between the amount of the old Cuban quota distributed to
domestic areas as compared to the amount distributed to foreign
countries.
While it is not our desire to object to any increase in domestic pro-
duction, we feel it is only fair to point out that the bill provides dis-
proportionate quota increases to the beet producers as compared to
the domestic cane industry. The adjusted basic quota for domestic
beet sugar in 1962 would be increased from 2,400,000 tons to 2,650,000
tons-an increase of about 10 percent. The adjusted basic quota
for mainland cane sugar for 1962 would be increased from 750,000
tons to 895,000 tons-an increase of about 20 percent.
While the formula for domestic beet participation in our domestic
increase in sugar consumption has been raised a few percentage
points, it is apparent that if technological increases in our productive
ability continue at their present rate, total increased acreage of
sugarbeets during the life of this bill will be very modest. We point
this out because we feel many beet growers are anticipating a greater
growth in sugarbeet acreage than is actually being provided for.
While the U.S. Department of Agriculture anticipates 1,183,000
acres of sugarbeets will be planted in 1962, the domestic beet quota
for 1963 under the bill would be 2,720,875 tons. If average yields
are achieved in 1963, including the normal increase in actual sugar
yield per acre, only 1,146,000 acres would be required to produce the
1963 quota.
The provision in the bill providing for new processing plants in
new areas would reserve about 20,000 acres each year out of the
national sugarbeet acreage quota. Since the figures in the previous
paragraph indicate that a somewhat smaller acreage from year to
year may be required to produce the same amount of sugar, it is
apparent that as 20,000 acres are set aside each year for new areas,
some cut in acreage may have to be applied to the old growers. To
explain further, it should be mentioned that the beet sugar producers
portion of our domestic increase in consumption would be about
70,000 tons per year. The 20,000 acres set aside each year for new
73
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74 SUGAR ACT AMENDMENTS OF 1962
plants in new areas is the equivalent of approximately 50,000 tons of
sugar per year, therefore the remaining 20,000 tons per year would
only be about half enough to absorb the average technological increase
in yields per acre.
A change incorporated in this new sugar bill which will preclude to
some degree increase in production of sugarbeets that has been possible
under the old law is the provision that domestic deficits in production
will be filled by foreign suppliers. Formerly domestic beet and main-
land cane producers were permitted to supply Hawaiian and Puerto
Rican deficits. We believe this is somewhat unfair to these domestic
sugar producers.
While we would like to have seen the provisions of the bill relating
to the purchase of our surplus agricultural commodities strengthened,
and while we also agree with much of what Congressman Quie has
said in his report, we have addressed our remarks to domestic provi-
sions of the bill because of our immediate concern for the welfare of
the domestic sugarbeet industry.
Despite the shortcomings of the bill, which we here set out, we think
it is most important that consideration of long-term sugar legislation
get underway promptly by Congress.
DON L. SHORT.
CATHERINE MAY.
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OPPOSING VIEWS OF HON. ALBERT H. QUIE
I am opposed to H.R. 12154 for the following reasons:
1. It denies flexibility in administration of the Sugar Act and.
prohibits the President from exercising his responsibilities in our
foreign policy;
2. It reduce* the, Cuban quota too far;
3. It gives permanent quotas to countries outside of the Western.
Hemisphere;
4. It gives permanent quotas to countries within the Western
Hemisphere who already have a financial relationship with a nation
outside the hemisphere to sell for premium prices; and
5. It provides for continual increases in the permanent quotas to
foreign countries through a share in U.S. consumption increases.
I have a particular interest in sufficient quotas for domestic pro-
ducers. It is important to understand that the domestic beet in-
dustry has not received any real increase in allowable production
under the provisions of this bill.
As some of my colleagues have pointed out, growers of sugarbeets
appraise growth in terms of total acres. Under this bill any increase
from present levels in planted acres appears highly unlikely. The
U.S. Department of Agriculture estimates that 1,183,000 acres are
being planted to sugarbeets this year. Under average yields this crop
would. produce more than 2,800,000 tons of sugar. The major portion
of this amount would be marketed in 1963 when, under the growth
factor provision, the best area quota would be 2,720,000 tons. This
excess in production over the allowable marketing quota, would be
added to inventories and would not result in an excessive carryover.
Under normal conditions, however, acreages required to produce beet
quotas in the remaining years of this act could be less than planted
acreages of 1962.
Even though I would like to have seen higher domestic quotas, I
am not objecting to the legislation for this reason: The sugar industry
made the agreement on the domestic quotas which they will receive,
and I do not wish to upset it. I will elaborate on my reasons for
objecting to the bill.
GLOBAL QUOTAS
Other than to countries in the Western Hemisphere and the Republic
of China and the Philippines, all of which are nations that we feel a
financial obligation toward, I believe it would be unwise for the
United States to continue to pay the high premium prices which
amount to more than $50 a ton for its imports of sugar. If any
nation were to sell to a country other than the United States, with
the exception of certain preferential market nations, all the sugar
could be secured at the world market price. It has been claimed by
many that the premium price is necessary in order to secure adequate
supplies of sugar from other countries of the world and thereby keep
our sugar price to the consumer stable.
75
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76 SUGAR ACT AMENDMENTS OF 1962
Quoting from Secretary Freeman's testimony before this committee,
he stated-
From the standpoint of the sugar economy, I would like to
say that the so-called global quota would restore security of
supply to a degree we have not known since Cuba became a
Communist country. The administration has recommended
global quotas, which would be secured by the imposition of
an import fee, which would be variable depending on the
world price of sugar.
In his testimony before the House Committee on Agriculture on
May 16, 1962, the Secretary had this further to say about global
quotas:
At present, this part of our total sugar supply-about 2.5
million tons under the proposed bill-is broken up into a
number of small compartments, each reserved for an indi-
vidual country. A natural disaster in any one of them, a
strike or other economic emergency, or a miscalculation as
to production interferes with the flow of sugar from that
source. This can no more be corrected quickly than it can
be foreseen. With a global quota, our refiners have many
countries from which to obtain their supplies. If a stoppage
occurs in the flow from one source, additional quantities are
readily available elsewhere. The situation reverts in essence
to what it was when Cuba maintained a large reserve avail-
able on short notice when and as needed. I have heard it
said that the so-called global quota will adversely affect
security of our foreign sugar supplies. In fact, for the
reasons I have stated, the reverse is true.
I have also heard it said that the import fee system might
cause a flood of sugar to appear in our ports at the beginning
of a year or at some other time during the year. I believe
that there need be no such fear. The very nature of the
flexible import fee eliminates the danger. If the flow of such
supplies increases unduly, it means that the world price of
:sugar is falling and the fee should and would be increased to
.compensate. On the other hand, if the flow of supplies
wanes, it means that the world price of suagr is rising and
the fee should and would be reduced correspondingly.
Sugar users would gain no price advantage through the
use of the system, but they would have much greater assur-
ance of supplies. On the other hand, domestic producers
.need not fear adverse effect upon their interests. They
would continue to receive the income protection which is
'inherent in the sugar program. Furthermore, for the long
pull the sugar program and the income protection imparted
to our domestic producers by reason of that program would
be on a sounder footing than it has been at any time since
,Castro came to power in Cuba.
CONGRESS ASSUMES RESPONSIBILITY OF THE EXECUTIVE
When sugar is purchased from countries outside the United States,
.a certain amount of flexibility in administration is necessary, since it
.cannot be determined at the beginning of the year, the adequacy of
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 Approved For Relgf&Vq%
supplies of any specific country, as was pointed out previously. I
think it is undesirable for- the Congress to attempt to administer laws,
as it is for the Executive to try to write our laws, which is constitu-
tionally the responsibility of the Congress. In this case, I think the
Congress is overstepping its bounds in attempting to allocate on a.
quota basis, either permanent or temporary, the country where every
pound of sugar should be purchased. A realization of this is the
provision in H.R. 12154 that each year the temporary quota shall be
reallocated. Again the Congress will have to sit with the experts in.
the executive branch of the Government and find out from them
where the sugar is available and where it is most desirable to purchase
it. Then decisions should be made from the study of experts who
have knowledge of the complete foreign sugar situation. Under our
system of government, a decision needs to be made by the head of a
department when foreign policy is involved and the great details
must be considered before determining the country where sugar should
be purchased, rather than compromising between the interests of the
various Members of the Congress.
CUBA
As I pointed out earlier, I feel that the domestic quota is too small,
that the potential of domestic production is so tremendous that we
could produce all of our domestic needs in this country, and that this
would be a great benefit to many of our own depressed agricultural
counties, but that I. am not objecting for this reason. However,
in the bill introduced by the chairman for the administration, Cuba
would have been allocated a permanent quota of 2,586,000 tons.
H.R. 12154 has cut this to 1,500,000 tons. When the domestic sugar
growers' organizations made their agreement as to the permanent
quota which they will receive, an assumption was made that an
agreement had been reached and the permanent quota allocated for
Cuba would not be less than 2 million tons. In the event we should
resume diplomatic relations with Cuba some time in the future, her
quota should not be less than 2 million tons. As the Secretary of
Agriculture stated in his testimony, "This change reserves for Cuba
a market for a substantial quantity of the sugar crop when we resume
diplomatic relations."
I also want to quote from our committee.h.earings from the state-
ment of Mr. G. Griffith Johnson, Assistant Secretary of State for
Economic Affairs, who represented Under Secretary Ball:
Finally, and I hope that the committee will give special
consideration to this factor, we must be prepared for the day
when Cuba returns to the West. At that time, Cuba must
have the opportunity to sell sugar in the U.S. market. If
we continue to distribute the Cuban quota with the premium
price to other countries, vested interests in the new and
larger quotas would become entrenched. It would be ex
tremely difficult to reduce these quotas so as to provide a,
market for Cuba's major export commodity. It also would
provide Castro with a persuasive argument that the West
has deserted the Cuban people and that their economic future
lies with the Communist bloc. Making the Cuban quota.
available now to all friendly countries on a nondiscriminatory
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R CT
2
basis would diminish the buildup of vested interests and still
provide Cuba the opportunity to reenter our market.
Cuba, under the expiring legislation, has a permanent quota of
3,100,000 tons, and as the Secretary of Agriculture pointed out in
his testimony, "Cuba's proration has been reduced sufficiently to
accommodate the increases in domestic quotas." I think the per-
manent quota of 1,500,000 tons is too small if we are going to hold
out an inducement to Cuba. However, it should also be pointed out
that in all fairness, if the Congress decides to reduce Cuba's permanent
sugar quota below 2 million tons, which was presumed to be the
floor by the domestic sugar growers, these domestic sugar growers
should share in the permanent reallocation of these quotas.
COUNTRIES OUTSIDE THE WESTERN HEMISHPERE
In the past, the United States has given permanent sugar quotas
only to Western Hemisphere nations with the exception of the Re-
public of the Philippines, with which we have a treaty agreement,
and the Republic of China whom we have been assisting ever since
the Communists pushed them off the mainland-and for some reason
which is hard to determine, a small quota was given to Canada and
several Western European countries. Under this proposed bill, it
is proposed to give substantial permanent quotas to the Union of South
Africa, the Island of Mauritius, the Fiji Islands, Australia, India, and
the Netherlands. It surely seems unwise to me that the United
States should begin allocating permanent quotas to countries for which
we feel no financial responsibility. I believe that any permanent
quotas, outside the Western Hemisphere, in the future should be
limited to the Republic of the Philippines and the Republic of China.
Under the expiring sugar legislation, certain countries in the Western
Hemisphere have received permanent sugar quotas. In the past, no
permanent quotas have been allocated to countries which have some
financial arrangement for premium prices to be paid on sugar pur-
chased by nations outside of the Western Hemisphere. This bill
provides that French West Indies, British West Indies, and British
Honduras would receive permanent sugar quotas from the United
States, even though they already have sugar arrangements with the
British Commonwealth or France, who in turn would have a demand
which could be filled from sugar purchases from Cuba at the world
price. We have had a ban on imports of sugar from Cuba for some
time, and have been concerned about the possibility of transshipments
through other countries. This surely looks like an indirect trans-
shipment.
CONSUMPTION INCREASES
H.R. 12154 provides, as did the administration bill, that the in-
creases in consumption in the United States each year will be allocated
63 percent to domestic producers and 37 percent to foreign sources.
Although I do not agree that 63 percent is a sufficient amount to
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allocate to our domestic producers with this great production poten-
tial, it is not the reason for my objection to H.R. 12154. An agree-
ment has been reached by the domestic sugar industry to accept this
figure. I disagree with the allocation of 37 percent of the annual
increase in sugar consumption to the permanent quota countries whose
quotas, if H.R. 12154 is passed, will have been substantially increased.
If the Congress is to make the decision from time to time as to what
permanent quotas should be allocated to any country for which we
feel a financial obligation-as I pointed out-this should be limited to
the Western Hemisphere, with the exception of the two countries, the
Philippines and the Republic of China. No further increase in per-
manent quotas should automatically be allocated to them because of
increased domestic consumption. I believe that this 37 percent
should be secured on a global quota basis, that is, purchased from any
country with whom we have diplomatic relations in the world.
I quote from the statement of Mr. G. Griffith Johnson, Assistant
Secretary of State for Economic Affairs, who represented Under
Secretary Ball:
This fee would be approximately equal to the amount by
which our domestic sugar price exceeds the foreign market
price for sugar, except that for countries now having basic
quotas, the fee would be imposed in five equal steps over the
life of the act. It would eliminate substantially all this sub-
sidy or price incentive which now stimulates foreign countries
to struggle so desperately for a sugar quota in the U.S. mar-
ket. In the absence of this price subsidy, the need for
individual country quotas disappears. Within the limita-
tions of an overall global quota, the market can then be
opened to all friendly countries on a completely nondis-
criminatory basis. The funds collected from the import fee
would be deposited in the Treasury of the United States.
When the bill is considered on the floor of the House, I intend to
offer a series of amendments which would :
1. Set the Cuban drawback at 2 million tons, rather than at 1.5
million tons as provided under the committee bill.
2. Set smaller quotas for fewer nations than is proposed by the
committee bill. Only Western Hemisphere nations not connected
with the United Kingdom and France along with the Philippines and
the Republic of China should share in permanent quotas.
3. Establish a global quota system for the 2,160,000 tons not allo-
cated to specific countries, rather than tying down every pound, of
sugar as the committee bill does.
4. Delete the authority in the bill for repaying Dominican Republic
sugar interests some $22.8 million withheld by our Government from
certain Dominican sugar imports in 1960 and 1961.
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SUGAR ACT AMENDMENTS OF 1062
A comparison of present quotas, the committee bill, and my sub-
stitute follows:
Committee bill
Quie substi-
Present
tute
perma-
quota
,
nent o
l
Permanent
Temporary
n
y
Domestics-----------------------------------
Cuba
5,810,000
5,810,000
--------------
_______________________________
3,100,000
1,500,000
------------
2,000,000
Philippines
__________________________________
Peru
980,000
1,050,000
150,000
(gbal quota)
1,000,000
_________________________________________
Dominican Republic_________________________
M
122,000
111,000
200,000
200,000
150,000
150
000
150,000
150
000
exico
Brazil
95,000
95,000
200,000
,
160,000
,
160,000
British West Indies___________________________
0
0
190,000
100
000
150,000
150
090
160,000
Australia-------------------------------------
French West Indies
0
,
50,000
,
150,000
0
0
_______________________
Nicaragua-----------------------------------
Costa Rica
0
17,000
40,000
30,000
______________
0
-------------
Republicof China____________________--______
E
4,000
4,000
30,000
45,000
----------___
150
00
10,000
20
000
cuador------------------------------------
Colombia
0
30,000
,
-
,
H
aiti-----
Guatemala
la
0
8,000
35, 000
25,000
--------------
--------------
10,000
0,000
entin
-----------------------------------
Arggentin
Argentina
0
0
20,000
20
000
--------------
10,000
India
-
South Africa
0
,
30,000
--------------
100,000
10,000
0
--------------------------------
Panama--------------------------------------
0
4
000
20.000
15
000
100,000
0
El Salvador----------------------------------
Pa
a
,
0
,
10,000
--------------
10,000
6
r
guay------------------------------------
British Honduras------------
0
0
10,000
-
----------
Fiji Islands ----------- ------
_
---------------------
0
10,000
10
000
--------------
0
Netherlands----_
?------_-
Mauritius
4,000
,
10,000
0
0
------------------------------------
0
10,000
100,000
0
Unallocated amounts for additional global
730,000
quota--------------------
-----------------
Total
----------------------------------
--------------
-?
--------------
9,700,000
--------------
,5
1,600,000
160,000
9,700,000
ALBERT H. QUIE.
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MINORITY VIEWS OF CONGRESSMAN
RALPH F. BEERMANN
Item: I think it well to point out to the House the confinement
inherent in the permanent assignment of quotas to foreign countries
of 50 percent of the Cuban fallback (3,100,000). One million tons
could have been assigned with the remaining 2 million tons retained
for an influencing factor in Cuba's rejoining the free world nations.
Item: I question the wisdom of permanent assignment of quotas to
countries outside the Western Hemisphere.
Item: I am alarmed because I believe there, is a strong possibility
the administration will use the supply management aspects of sugar
legislation, dealing with a commodity in short domestic supply, as a
means of "selling" Congress the same philosophy in other farm legis-
lation.
I could see much more merit in this bill if it contained a provision
(as one draft did) under which U.S. surplus farm crops could be
exchanged for sugar on an equal dollar value basis. When the com-
mittee failed to include this provision I believe it missed a"golden
opportunity to help agriculture, the taxpayers, and U.S. farm income.
Item: This bill contains a provision under which the Dominican
Republic would be paid $22 million, withheld from previous sales to
keep the money from falling into the hands of a Dominican dictator.
This $22 million is now the subject of litigation in the U.S. Court of
Claims. For the committee to anticipate the decision of that tribunal
is tantamount to bypassing established legal processes and amounts
to an assumption of judicial power.
Item : To be more effective the provisions of the bill penalizing
countries expropriating American property should be retroactive to
January 1, 1962. Instances of expropriation have occurred since
that date and just compensation has not been made to injured parties.
Item: Since this bill will probably be reported under a closed rule,
I believe it would be well to point out that it was conceived and
executed in some haste under the pressure of meeting a deadline.
Because of that haste members of the committee have not had suffi-
cient time to examine its ramifications. In addition this haste pre-
vented an adequate assessment of the bill in its final form. A closed
rule would further prohibit the House from exploring or amending
the bill to its satisfaction..
Item: This bill allocates far too little of the domestic need to the
domestic producers. Had the domestic producers been given larger
allocations, it would have enhanced farm income, presented new
opportunities for capital investment, and permitted a shift from pro-
ducing crops in surplus to crops not in surplus.
81
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ADDITIONAL MINORITY VIEWS OF CONGRESSMAN
BOB DOLE
The Sugar Act Amendments of 1962 are very complex and it should
be clearly understood that the measure now under consideration
would extend the Sugar Act of 1948 from June 30, 1962, to December
31, 1966. Hearings on most phases of the bill have been extensive
and the objections are laudable; however, I feel one or two areas
deserve special comment.
First, I would point out that an amendment was offered to this
bill by the chairman, Mr. Cooley, which in effect required our Com-
mittee on Agriculture to function as a jury in cases now pending
before the U.S. Court of Claims involving the South Puerto Rico
Sugar Co. which has sued our Government for approximately
$6,800,000, the Dominican Sugar Co., which has filed suit for approx-
imately $14 million, and the third importer which has not yet insti-
tuted suit but which will benefit by receipt of approximately $ 1,900,000,
if the,Cooley amendment remains in this bill.
The legality of any claims now pending in the U.S. Court of Claims
or of any future claims depends upon imposition of a fee on nonquota
sugar imported from the Dominican Republic during the period
July 1, 1960, to March 31, 1961, and for the information of the
Members I direct their attention to a report submitted to our com-
mittee by the U.S. Department of Agriculture.
[Submitted to House Committee on Agriculture by the U.S. Depart-
ment of Agriculture]
STATEMENTS CONCERNING FEE IMPOSED ON NONQUOTA
SUGAR IMPORTED FROM THE DOMINICAN REPUBLIC
DURING THE PERIOD JULY 1, 1960 TO MARCH 31, 1961
The Sugar Act of 1948 controls the supply of sugar for
the U.S. market and, as a result, the price of sugar here is
usually substantially higher than in the world market. The
price difference is commonly referred to as the quota pre-
mium. The benefits of this quota premium to producers of
sugar manufactured in foreign countries is a direct result of
the operation of the Sugar Act.
Prior to July 6, 1960, Cuba supplied about one-third of
the continental U.S. sugar requirements or, stated in another
way, about three-fourths of the sugar imported into this
country. On July 6, 1960, Public Law 86-592, 74 Stat. 330,
was enacted which amended section 408 of the Sugar Act of
1948 to add a new subsection which provides in part that.
"Notwithstanding the provisions of title II of this Act
(title II pertains to the sugar quotas for domestic areas
and foreign countries), for the period ending March 31,
1961:
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SUGAR ACT AMENDMENTS OF 1962 83
"(1) The President shall determine notwithstanding any
other provision of title II, the quota for Cuba for the balance
of calendar year 1960 and for the 3-month period ending
March 31, 1961, in such amount or amounts as he shall find
from time to time to be in the national interest * * *."
"(2) For the purpose of meeting the requirements of
consumers in the United States, the President is thereafter
authorized to cause or permit to be brought or imported into
or marketed in the United States, at such times and from such
sources, including any country whose quota has been so
reduced, and subject to such terms and conditions as he
deems appropriate under the prevailing circumstances, a
quantity of sugar, not in excess of the sum of any reduction
in quotas made pursuant to this subsection: * * *."
Section 408(b) (2) then, in brief, provides that to the extent
the President determines that supplies of sugar are needed to
meet the requirements of consumers in replacement of the
Cuban quota, Cuba's share in any deficits in domestic area
quotas which forms a part of the reduction in Cuba's quota
shall be allocated to domestic areas; that the remainder of
the quantity needed shall be apportioned in raw sugar under
a system of priorities to certain foreign countries; and that
to meet the requirements of consumers the President may
authorize the purchase from any foreign country of quanti-
ties of sugar which priority countries cannot supply.
It is generally recognized that the provisions of Public
Law 86-592 were enacted as a consequence of the unfavor-
able actions and attitude of Cuba toward the interests of the
nationals and the Government of the United States. By
Proclamation No. 3355 effective July 8, 1960, the President
reduced the Cuban quota for 1960 by 700,000 short tons.
Effective December 21, 1960, the President by Proclama-
tion No. 3383 determined that the quotas for Cuba for the
3-month period ending March 31, 1961, should be zero.
In Proclamations No. 3355 and No. 3383 the President
delegated to the Secretary of Agriculture the authority
vested in the President by section 408(b)(2), such authority
to be exercised with the concurrence of the Secretary of
State. The quantities of sugar which may be authorized for
entry under section 408(b)(2) are referred to as "nonquota
purchase sugar" and are distinct from and in no way affect
the quantities of sugar authorized to be entered under quotas
pursuant to the provisions of title II of the Sugar Act of
1948, as amended.
By regulation published in the Federal Reigster (25 F.R.
9197) and effective September 26, 1960, the Secretary of
Agriculture with the concurrence of the Secretary of State
authorized the purchase and importation during 1960 of
321,897 short tons, raw value, of nonquota purchase sugar
from the Dominican Republic. That regulation provided
that as a condition for the importation of any nonquota
purchase sugar a fee of $0.02 per pound raw value should be
paid to the United States. This condition was imposed as
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84 SUGAR ACT AMENDMENTS OF 1962
an appropriate means of carrying out the advice of the
Department of State that under the prevailing circumstances
attending the foreign policy of the United States, it was in
the national interest that the nonquota sugar authorized to
be purchased from the Dominican Republic should be pur-
chased at prices which were lower than those then current
in the United States, and which would reflect approximately
the world market price.
By regulation of January 1, 1961 (25 F.R. 13864) the
Secretary of Agriculture with the concurrence of the Secre-
tary of State authorized the purchase and importation during
the 3-month period ending March 31, 1961, of 222,723 short
tons, raw value of nonquota purchase sugar from the Domi-
nican Republic, and a fee of $0.0225 per pound, raw value,
payable to the United States was required as a condition
for importation of any such sugar. The imposition of such
condition was based upon the same considerations as are
stated above with respect to the fee of $0.02 per pound.
These fees applied to nonquota purchase sugar and did not
Vapply to other sugar imported from the Dominican Republic
under quotas established pursuant to title II of the act.
In both instances the amount of the fee, while approximat-
ing the quota premium, did not exceed the then quota pre-
mnium which existed during the period nonquota purchase
sugar was imported from. the Dominican Republic. During
the months of September through December 1960, the
monthly average quota premium ranged from slightly under
to slightly over $0.0225 per pound and for the months
January to March 1961, it ranged from $0.0240 to $0.0245
per pound.
The South Puerto Rico Sugar Co. Trading Corp., entered
about 30 percent of the total nonquota purchase sugar from
the Dominican Republic during the last half of 1960 and the
first quarter of 1961; the Porcella Vicini Co., about 8 percent
and Trujillo affiliated interests about 62 percent.
'1.' he Sugar Act was again amended by Public Law 87-15
in March 1961, to relieve the President of the requirement to
authorize the purchase of any nonquota purchase sugar from
the countries with which the United States is not in diplo-
matic relations. No further nonquota purchase sugar was
authorized from the Dominican Republic until the present
year by which time diplomatic relations had been resumed.
The South Puerto Rico Sugar Co. Trading Corp. and the
Dominican Sugar Corp. have brought action in the Court of
Claims to recover the fees each paid as a condition for im-
porting nonquota purchase sugar during the last half of 1960
and the first quarter of 1961. The South Puerto Rico Sugar
Co. Trading Corp. seeks recovery of $6,885,861.79 and the
Dominican
the responsible Sugar e legal Corp.,
authorities the Govern It ithe opinion
ment that
the fee was properly and legally imposed
It is clear as stated by the USDA the fee was-properly and legally
imposed, which opinion is shared by the Department of Justice as
indicated by the following letters:
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SUGAR ACT AMENDMENTS OF 1962 85,
JUNE 14, 1962.
Hon. ROBERT J. DOLE,
House of Representatives,
Washington, D.C.
DEAR CONGRESSMAN DOLE: With reference to the request by tele-
phone of your Mr. Katz, there is enclosed herewith a copy of the
memorandum of telephone conversation between you and Mr. John.
B. Miller, in relation to the Dominican sugar matter.
Sincerely yours,
JUNE 13, 1962.
JOSEPIi D. GUILFOYLE,
Acting Assistant Attorney General.
Mr. JOSEPH D. GUILFOYLE,
Acting Assistant Attorney General, Civil Division.
JOHN B. MILLER,
Chief, Court of Claims Section.
DOMINICAN SUGAR CASES
I spoke with Congressman Robert J. Dole (code 180,.
extension 2715) on the telephone this morning about 10
o'clock with regard to a proposed amendment to the Sugar
Import Act pending before the House Agricultural Com
mittee, of which he is a member, which would authorize the
refund of some $22 750 000 collected in import fees on sugar
ommican Repuublic
Imported rom the
the -spring _of 1 -These import fees, you will recall, were I
impose& Because this Government did not want the Trujillo
government of the Dominican Republic to realize additional
profit from the difference between world market prices and
the higher prices paid on the American market for sugar
Th
e
imported over and above their regular import quota.
ular import quota for the Dominican Republic and other
re
g
sugar-producing_ countries was increased to make up the
imposed about that time due to the activities of the Castro
ime The South Puerto Rico Sugar Co. is suing for return
re
g
. of +.hese fees in an amount of about $6,800,000, and the,
nt ro
$14
o
C
._=
u
am
o., LVL all
Dominican Sugar
There is a third importer which paid fees of some $1,900,000,
but who has not yet instituted suit.
Congressman Dole wanted to know if the Department
of Justice had valid defenses to the suits and if it intended.
to assert them. I pointed out to him that we did consider
that we had valid defenses and that we had already asserted.
them in our answer. He said he had read our answer and
knew its contents. He said that his position is that when a
matter is pending in court, the Congress should not interfere
and should let the court make the decision, but before taking
that position before the committee he wanted to be certain
that the Department had not already indicated to other
sources that there was no defense to the cases or that the
cases would not be defended. I assured him that the De
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86 SUGAR ACT AMENDMENTS OF 1962
partment, to my knowledge, had not so stated and that there
would be no proper basis for that kind of statement. I also
mentioned to the Congressman that it was my understanding
that the State Department was not sponsoring the amend-
ment, and he said he himself had been informed that the
State Department was in fact opposed to it.
Mr. Katz, Congressman Dole's administrative assistant,
called about 11 a.m. to ask for a letter based on our telephone
conversation. I suggested that he write to the Department
making that request, and he said he would do so.
It is strange our committee, or this Congress, would have any
reason to interfere in this legal controversy. Certainly we will
recognize our moral obligations, if any, to the present Dominican
Government and the private companies involved; however, this is
not the issue. The issue is whether or not a last minute, complex
amendment authorizing payment of some $22,755,153.67 adopted
without full and complete hearings should be presented in this manner.
There is no apparent legal justification why Congress should preempt
the executive and judicial branches of Government in this instance.
MEASURE LACKS IMPORTANT PROVISION
Nearly everyone talks about, speculates about, and frets about
surplus agricultural commodities. An excellent method of insuring
disposal of surpluses would have been to provide in this legislation
that any sugar-producing nation receiving an allocation of sugar
would receive it with the understanding the dollar credits would be
used for purchase of surplus agricultural commodities in this country.
No such provision is contained in this legislation and there is only a
brief reference to such exchanges in the majority report.
On May 21, 1962, Clifford R. Hope, a former distinguished Member
of Congress from the State of Kansas for many, many years, a former
chairman of the Committee on Agriculture and now president of
Great Plains Wheat, Inc., a market developing corporation supported
by wheatgrowers in Colorado, Kansas, Nebraska, North and South
Dakota, appeared before our committee and made the following state-
ment:
[Partial Statement of Clifford R. Hope]
It is with this thought in mind that Great Plains Wheat
has for the past 2 years been working on the idea of devising
a procedure, legislative or otherwise, which would enable
a sugar-producing nation to receive an allocation of sugar
with the understanding that the dollar credits so generated
would be used for the purchase of surplus agricultural
commodities in this country.
Thanks to this committee, under the leadership of its
distinguished chairman and other members, and to the
Finance Committee in the Senate, the extension of the Sugar
Act on March 31, 1961, contained a provision stating that
in making allocations under the act, "* * * special con-
sideration be given to countries in the Western Hemisphere
and those countries purchasing U.S. agricultural com-
modities." But the committee did not stop there. On more
than one occasion, it expressed itself vigorously on the
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,SUGAR ACT AMENDMENTS OF 1962 87
subject. In particular, it adopted a committee resolution
on September 7, 1961, which reads as follows: "That the
President be requested to instruct those in charge of admin-
istering the program that it is the clear intent of Congress
that in making any such purchases of sugar for the calendar
year 1962, clear preference is to be given those countries which
offer to buy a reasonable quantity of U.S. agricultural
commodities in return for the purchase of their sugar."
On February 12, 1962, a press release from the Depart-
ment of Agriculture announced that (and I quote) "Subject
to market conditions and other factors, some importations
of sugar would be authorized from countries agreeing to pur-
chase additional commodities," and that "Such authoriza-
tions will be in addition to any other quota a country may
have under the U.S. Sugar Act, and are authorized by the
provisions of the Sugar Act of 1948, as. amended on March 30,
1961, Public Law 87-15."
Since then, pursuant to the legislation and in accord with
the tenor and intent of the committee resolution of Septem-
ber 7, 1961, allocations of sugar quotas for 1962 have been
made to a number of countries on the basis of agreements
by such countries to purchase U.S. agricultural commodities.
The countries involved, the amount of sugar allocated, and
the agricultural commodities agreed to be purchased are as
follows: Brazil, 50,000 short tons of sugar and an agreement
to purchase wheat; India, 50,000 short tons and an agreement
to purchase cotton; Republic of China (Formosa), 29,000
short tons, cotton and tobacco; Fiji Islands, 5,000 short
tons, rice and flour; Ireland, 5,000 short tons, corn and grain
sorghum; El Salvador, 5,000 short tons, wheat and yellow
corn; Colombia, 5,000 short tons and Wheat; Guatemala,
5,000 short tons, item to be purchased, yellow corn. The
total allocations amount to 154,000 short tons.
It seems to me that deals like this make sense. They not
only tend to compensate for our lost agricultural outlets in
Cuba, but if used extensively, open up important new dollar
markets for agricultural commodities in many parts of the
world. They contribute also to the stability of the develop-
ing countries by giving them assurances of more stable food
supplies for their increasing population and an outlet for one
of their principal surplus commodities. It also constitutes
a foundation for future commerce in the normal channels of
trade and shifts a part of our aid program to a trade program.
I am disappointed that the pending bill, H.R. 11730, does
not contain language making possible sugar-agricultural com-
modity transactions as provided by the 1961 extension to
which I have made reference, and on behalf of Great Plains
Wheat desire to recommend that a similar or an even stronger
provision be included in this measure.
In addition, the organization which I represent believes
that even more can be accomplished in trade promotion and
development if provisions are included in the bill which
would provide allocations of sugar for the full period covered
by the bill to countries which would agree to purchase U.S.
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88 SUGAR ACT AMENDMENTS OF 1962
agricultural commodities. This, of course, would require
amendment: of the pending bill to provide for specific allot
ments to sugar producing countries for the full 5-year period
rather than the global allotment as provided in the bill.
As an illustration of the possibilities both for the United
States and foreign sugar-producing countries, I would like to
bring to your attention the situation in Brazil. During the
past 2 years, Great Plains Wheat has conducted extensive
market development studies in that country. Early in the
course of this activity, it appeared that sugar-wheat trans-
actions offered possibilities for both countries.
Brazil is one of the world's largest sugar producers and in
a position to expand its output if market outlets can be
secured. It is also one of the world's greatest potential mar-
kets for wheat. As is well known, the population of Brazil
is approximately half of that of South America and is in-
creasing at an extremely rapid rate.. As to the consumption
of wheat, Brazil has a very low per capita consumption,
approximately 32 kilos in 1960, the latest year for which I
have figures. This compares with 74 kilos in the United
States and much higher figures in such countries as Argentina
and Chile where supplies are ample. In some areas, parti-
cularly the poverty stricken northeastern part of the country,
the consumption is about 10 kilos per capita. As a matter
of fact, Brazil's per capita consumption in 1960 was less than
in 1953 and declined steadily from 1955 to 1960. The same
thing is true of total consumption.
In the main, this has been due to a smaller supply of wheat.
Domestic production, never a too important factor, has
declined. Over the years, Argentina has been the principal
supplier but has fallen down on its commitments during the
past 2 years and has now suspended exports for this year.
Our country has filled the gap to some extent with Public
Law 480 shipments which have increased markedly. Brazil
also has a bilateral agreement with Russia calling for im-
ports at the rate of 200,000 metric tons through 1964, but
this is a very small part of even the present low consumption.
The national target for the past few years has been a supply
of 2,400,000 metric tons, but this has not been met for several
years. This, of course, is low as indicated by per capita
consumption. Careful studies indicate that under condi-
tions of free purchases, Brazil would consume 3 million
metric tons in 1962-63 with annual increases leading up to
a figure of 4 million metric tons by 1970.
While Public Law 480 assistance helps it is not the whole
answer because Brazil, like other countries, does not knowwhen
such supplies may be discontinued or curtailed. It cannot
afford to expand imports even under 480 unless there is a
cushion somewhere to fall back on. The answer lies in more
trade, and with our need for sugar and Brazil's need for
wheat, and with ample supplies of each in the respective pro-
ducing countries, it is not surprising that wheat producers
in this country and sugar producers in Brazil have been at-
tempting to work out a practical solution of the matter.
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SUGAR ACT AMENDMENTS OF 1'962
Over the past several months, conferences have been held
between representatives of the Brazilian Sugar and Alcohol
Institute and representatives of Great Plains Wheat. Gov-
ernment officials in both countries have known of these con-
ferences and have been kept informed of what was.being
discussed.
The principal spokesman for the Brazilian Sugar and Alco-
hol Institute has been Ambassador Edmund Barbosa da
Silva, president of that organization. Lester L. Mort, until
recently director of the Washington office of Great Plains
Wheat, has represented our organization. Out of their con-
ferences came an eight-page document which contains much
pertinent information with respect to the wheat situation in
Brazil. Page 8 contains; a formula which in general terms
outlines the conclusions and agreements reached between
Ambassador da Silva and Mr. Mort. I would like to ask
unanimous consent at this time to submit this document for
the record as a part of my statement.
Undoubtedly there are many other sugar-producing
countries which are comparable to Brazil in the respect that
they are willing and able to purchase agricultural commodi-
ties from this country providing they can build tip dollar
balances from the export of sugar. Doubtless the committee
will want to give consideration to such cases as may exist.
We had expected before this time to receive assurances
that the Brazilian Government looked with favor on the
proposals which I have discussed and would be prepared to
make a proposal for a sugar-wheat transaction over a period
of 5 years, providing that this legislation is passed in a form
which would permit sugar allocations for that period. Such
assurances have not yet been received, but I have been told
they are on their way. I would like to have the consent of
the committee to file them as a part of this statement when
they are received.
Mr. Chairman, I consider the Sugar Act of 1934 a very wise
piece of legislation. It has been extended a number of
times and has operated satisfactorily and successfully for 28
years through war and peace, in prosperous times and in
depressions. One reason for this is that it has been flexible
enough to apply to changing situations.
The greatest change which has occurred has been the
emergency of the Castro regime in Cuba. That has called
for drastic measures, but it has been possible to take them
without impairing the general purposes of the act. A pro-
vision in this bill permitting a definite allotment for the life of the
act to countries like Brazil, which are willing to take up the slack
in American agricultural exports left by the defection of Cuba,
would be in full harmony with the original purpose of the act and
would strengthen both us and the recipient country receiving such
an allotment. The extent of the benefits received in terms of
economic stability and market development would, in my
opinion, depend materially on the length of time for which
the allotment was made.
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SUGAR ACT AMENDMENTS OF 1962
We have missed a golden opportunity to reduce surpluses in all
areas by not providing specific language in the bill.
In conclusion, there is little likelihood potential new growers, or old
growers, desiring to increase their production of sugarbeets in Kansas
and elsewhere in this country will benefit substantially by enactment
of this legislation. The provisions for new beet factories are vague
and uncertain and it is anyone's guess where and when new factories
may be built should this legislation be enacted in its present form.
It would again appear the American farmer who is so desirous of rais-
ing sugarbeets, a crop obviously not in surplus, must stand in the
shadow of foreign sugar interests, with little hope of improving the
situation until the expiration of this act, December 31, 1966. If this
is "supply management," then heaven help the farmer if the adminis-
tration's 1962 farm bill should be enacted.
BOB DOLE.
0
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Reptd. with amendment S. Rpt. 1631 - 26 June
Amended on Sen ate Floor - 27 June
Passed Senate with amendment -27 June
Senate appoints conferees = 27 June
H.ouse " " 27 June
Conference Rpt submitted to House HRpt 1957
Conf. Rpt agreed to by House 30 June
Con. Rpt submitted to and agreed to by Senate 2 July
To President 3 July
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Reported - House Rpt. 1829 - 15 June 1962
Recommittal motion rejected by House - 19 June 1962
Passed House without amendment - 19 June 1962
To Senate Committee on Finance - 20 June 1962
Hearings on 20 June 1962
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