The Carter administration following reports of possible multimillion-dollar payments to sugar processing companies, has revised its sugar subsidy proposals to sharply reduce the amount the companies could keep.
Under current thinking, the department would allow sugar processors and millers to keep a "reasonable administrative fee" for redistributing subsidies to farmers but that fee could be no more than 10 per cent.
The department had previously concluded there was no legal or practical way to make payments directly to growers and instead would have to send checks to processors and millers.
Originally, the department would have these department divided to traditional contracts between farmers and the companies. This is normally about 67.68 per cent of the eventually selling price to the grower and 32.33 per cent kept by the processor and miller.
Recently The Washington Post published estimates from the Corn Refiners Association showing that under maximum subsidy payments, two large sugar beet processors could receive as much as $10 and $9 million respectively. The department also tracts some grower-processor contracts calling for a 59-41 per cent split.
A source said that the maximum 10 per cent administrative share was then settled on. The change has delayed the department's publishing of final regulations governing the sugar subsidy plan and the President now wants to receive them before they are published in the Federal Register.
The administration's sugar subsidy calls for payments to make up the difference between actual market prices and 13.5 cents a pound when the prices drop below that level. However, the payment would not exceed 2 cents a pound no matter how low prices go.
The subsidies are expected to cost a maximum of about $240 million, depending on market prices. Thus the potential share kept by processors and millers has been cut from about $90 million to $24 million.