Sugar protections prove easy to swallow for lawmakers on both sides of aisle

Lawmakers can't seem to agree on anything these days. Except ... sugar? Here's how a relatively small industry manages to win big in Washington. (The Washington Post)

Washington politicians facing a year-end deadline to cut billions in agriculture spending are feuding over the future of food aid for the poor and crop subsidies for farmers.

There is, however, one area of agreement in the contentious negotiations: sugar.

Lawmakers decided to preserve the decades-old government safety net that boosts profits for a relatively small group of growers and has cost consumers billions through artificially high prices.

The special protection is a testament to the enduring Washington clout of one of the country’s wealthiest farming interests, including the politically connected Florida family that controls a substantial share of the world’s sugar market.

Sugar makers succeeded by gaining the support of a wildly divergent collection of lawmakers — rural and urban, tea party and liberal — who have little in common other than the presence of sugar operations in their states.

Legislative backing for sugar policy

The industry doles out generous campaign contributions that outstrip those from other agriculture sectors. Its leaders have forged personal ties with senior lawmakers, congressional staffers and high-ranking officials in the executive branch.

A pivotal player is the Fanjul family of Palm Beach, Fla., which commands the world’s biggest refining operation, owns the ubiquitous brands Domino and C&H, and raises millions of dollars for politicians from both parties.

Sugar-beet farmers in the upper Midwest, responsible for about half of the country’s sugar production, have also enhanced the industry’s clout, funding political action committees and leaning on home-state lawmakers from a dozen states.

House and Senate negotiators, after months of struggling, are rushing to reach a farm-bill deal as early as this coming week. The talks have been stymied by rancor over how deeply to cut food benefits for millions of poor Americans and how to curb subsidies for hundreds of thousands of farmers.

Big candymakers and food manufacturers such as Hershey, Mars and Kraft — whose costs rise with sugar prices — waged a lobbying campaign to put sugar on the farm-bill casualty list as well.

But sugar has already won.

Wide range of support

The industry’s power was evident in the unusual alliances that formed in the House and Senate to thwart sugar-related measures over the past two years, turning ideological adversaries such as Sens. Al Franken (D-Minn.) and Marco Rubio (R-Fla.) into teammates operating from the same playbook.

“Removing the protections we have for our domestic sugar producers will do nothing but kill an American industry and outsource jobs to our competitors,” Franken said during a Senate floor debate this spring. Rubio, in the same debate, warned colleagues of the “risks to American jobs if reforms to our sugar program were to pass.”

The program, which has existed in various forms since the Great Depression, uses an elaborate system of import quotas, price floors and taxpayer-backed loans designed to prop up domestic growers, which number about 4,500.

Industry officials and their allies in Congress say the sugar program is needed to protect producers from a world market heavily distorted by subsidies from Brazil, Mexico and other major exporters. Without the program, the industry says, the U.S. economy would lose tens of thousands of jobs and become dependent on foreign sources to meet the nation’s sugar needs.

“It clearly is in the national interest to defend efficient American farmers against subsidized foreign producers,” said Jack Roney, an economist for the American Sugar Alliance, the Washington trade group whose primary mission is defending the sugar program.

Roney said lawmakers have supported the program because of its limited price to taxpayers. The industry has used the slogan “cost-free” as a mantra for years, and sugar backers in Congress frequently adopt it in their floor speeches and conversations with colleagues.

Still, the program does come at a cost. Government and academic studies, often disputed by the sugar industry, have estimated that elevated prices have cost foodmakers and consumers at least $1.9 billion a year.

In addition, taxpayers are on the hook for government loans that companies can choose to pay back in the form of excess sugar instead of cash and interest if prices drop below a certain point. That happened in fiscal 2013 for the first time in more than a decade, costing taxpayers $278 million in direct expenditures to sugar companies.

This year, a well-heeled coalition of sugar-using companies stepped up their lobbying efforts to portray the program as costly to consumers and American workers. Newly elected tea party conservatives vowing to crusade against government meddling in free markets also provided fresh potential support.

“You would have thought that this would have been the year for reform,” said Rep. Joe Pitts (R-Pa.), whose state is home to Hershey and who sponsored measures to roll back sugar support. But, he added, “we were up against a force.”

Liberal sugar advocates included Franken, whose state is home to a large concentration of sugar-beet farmers, along with Sen. Barbara A. Mikulski (D-Md.) and Rep. Eliot L. Engel (D-N.Y.), whose home areas include Fanjul-controlled refineries.

Nearly the entire Florida delegation — from Rubio, a potential 2016 GOP presidential candidate, to Rep. Debbie Wasserman Schultz, chairwoman of the Democratic National Committee — voted to keep sugar protections in place.

Strong support has come from House conservatives, as well, including Rep. Michael K. Conaway (R-Tex.), chairman of a key agriculture subcommittee.

“The sugar guys win votes because they are better at politics than anyone else,” said one lobbyist who is close to sugar executives and requested anonymity to discuss industry thinking. “What other interest group in town do you know that can consistently draw support from hard-core conservatives, ethnic liberals and cost-conscious moderates?”

Campaign spending

The industry is tiny in comparison to other agricultural commodities, but it outspends all other crop sectors combined on political-action-committee contributions to federal candidates. Sugar interests have spent $49 million on federal campaign donations and lobbying over the past five years.

On average, sugar farmers and employees gave more than five times as much money to members of Congress who sided with the industry than to members who did not, according to an analysis of key votes conducted for The Washington Post by the Center for Responsive Politics.

The Fanjuls are the most influential of the growers, according to lawmakers and lobbyists, exerting pressure through political fundraising and personal connections that belie their low public profile.

The family patriarchs, José “Pepe” Fanjul and Alfonso “Alfy” Fanjul, built their empire after fleeing the regime of Fidel Castro, which seized the family’s sugar business in Cuba after coming to power in 1959. Now the brothers grow and process cane sugar on 160,000 acres they own in Florida. Their holdings include refineries in Baltimore, New York, Louisiana and California, and plants in Mexico, Belize and Europe. They control much of the Dominican Republic’s sugar production.

They have also built an unusually broad power base on Capitol Hill. Pepe has donated and raised millions for Republicans; Alfy has done the same for Democrats.

“They come to Washington often, meet quietly with individual members, usually without staff present,” said the lobbyist close to industry executives.

Their high-level access drew rare public notice in the 1990s when Monica Lewinsky described a phone call to the Oval Office from Alfy during one of her private encounters with President Bill Clinton. Under the George W. Bush administration, White House officials expended effort trying to mollify the Fanjuls, who were personally persuading members of Congress to oppose a free-trade pact with sugar-producing Caribbean nations.

Rubio paid tribute to the Fanjuls in his autobiography, crediting Pepe and his wife for a “crown jewel” fundraising event and for hosting a dinner on his boat to introduce Rubio to former New York mayor Rudolph W. Giuliani. Pepe Fanjul hosted a series of fundraisers for Rubio in March of this year, including a $10,000-per-person dinner at his Palm Beach estate.

Gaston Cantens, a lobbyist for the Fanjuls, said the brothers advocate for their business just as any industry executives would.

Political friendships are built over many years, Cantens said, and do not always result in the family getting what it wants. He said the family supported Sen. Ted Cruz (R-Tex.), a Cuban American conservative who voted this year to roll back the sugar program.

In addition to the Fanjuls, the industry has retained a core of lobbyists, experts and other advocates that could “fill a stadium,” as one lobbyist put it. Former congressman and House Agriculture Committee chairman Larry Combest (R-Tex.) and former committee deputy chief of staff Tom Sell run a lobbying firm that represents sugar interests.

Independent cane and beet growers from Louisiana and the Red River Valley of North Dakota and Minnesota fly to Washington regularly to walk the halls of Congress and make the case for sugar, emphasizing that the program helps family-owned farms stay in operation.

“These guys are disciplined, they know the arguments, and they are organized,” said Rep. Collin C. Peterson (D-Minn.), the ranking Democrat on the House Agriculture Committee. His district includes the country’s largest concentration of sugar-beet farmers.

As a rule, the industry meets with every incoming freshman member of a new Congress. This year the list included Rep. Ted Yoho (R-Fla.), elected in 2012 on a tea party platform.

Yoho quickly gained national recognition for, among other things, pressing House Republicans to cut deeply into farm bill programs such as food stamps.

But on sugar subsidies, the livestock veterinarian said he has grown to support the industry view. He is sponsoring a sugar-backed resolution that favors giving up the sugar program only when other countries end their subsidies.

“I ran on limited government, fiscal responsibility and free enterprise,” Yoho said, “but when you’ve got programs that have been in place and it’s the accepted norm, to just go in there and stop it would be detrimental to our sugar growers.”

Alice Crites contributed to this report.

Tom Hamburger covers the intersection of money and politics for The Washington Post.
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