The Carter administration has decided to help the nation's ailing sugar yesterday.
The direct federal payment, which could cost taxpayers up to $240 million a year, is said to be cheaper than an artificial, government-created rise in sugar prices. One sugar industry estimate says that each penny-a-pound increase in prices costs consumers $225 million.
In opting for sugar subsidy payments, the administration also rejected any limit on cheaper imports, thus marking the second time in recent weeks that the President has refused to act against imports to protect an American industry.
The subsidy marks a return to federal support of domestic sugar farmers after two years of high prices and one of disastrously low ones. Sugar hit a peak - 57 cents a pound raw and 63 cents a pound retail - in 1974 when worldwide supplies appeared to be short.
But since the old Sugar Act expired in 1974, there have been no import restrictions. Agriculture Secretary, Bob Bergland had originally sought to raise prices by restricting imports and by offering farmers loans that guarantee them a minimum price. More recently, however, he supported the current plan after other administration officials expressed concern about trade restrictions and higher consumer prices.
In March, the International Trade Commission declared that low-cost imported sugar was a threat to the domestic sugar industry; it urged reductions in imports. The nation currently produces about 6 million tons of sugar a year and imports 4 million tons.
The administration plan, as described by knowledgeable sources calls instead for a maximum 2-cents-a-pound payment to domestic sugar processors when the New York import price of raw (unrefined) sugar is below 13.5 cents a pound. The subsidy would cover the difference between the actual selling price and the 13.5-cents target - up to 2 cents. Thus if sugar traded at, say, 11 cents a pound, the maximum payment would still be 2 cents a pound.
The New York import price yesterday was 11.92 cents a pound.
Sugar processors one source said, would share the subsidy payment with farmers according to their own contracts. Many sugar beet farmers receive about two-thirds of the eventual sales price of processes sugar.
Present sugar prices do not cover the cost of production. An Agriculture Department source has said 13.5 cents is the break-even point for domestic growers, although in some regions it can be about 20 cents a pound.
The administration decision to use subsidy payments instead of a minimum sales price also benefits the sugar cane refiners. They have increasingly felt the pressure of cheaper substitutes - very sweet syrup refined from corn - and had opposed higher prices as making sugar less competitive with corn syrup.
The corn refining industry has opposed any sugar subsidies, calling them an artificial way of keeping sugar competitive with corn syrup.
The sugar subsidy plan is scheduled to be announced today, a month after the administration rejected high tariffs on imported shoes.