The Carter administration is considering a package of new duties and restrictive import quotas on foreign sugar to bring slumping domestic sugar prices up to the level set by Congress in the 1977 farm bill.
The action is expected to add 3 1/2 cents a pound to raw sugar prices - a 35 per cent increase - and eventually will mean higher costs for American consumers.
Administration officials said yesterday that they had agreed to speed up their timetable for dealing with the sugar situation after a showdown with Sen. Bob Dole (R-Kan.).
A threat by Dole last Wednesday to push a tough, mandatory import quota through the Senate spurred a frenetic round of compromise negotiations. An aide to the Kansas Republican said the threat to bring the matter to the Senate floor was withdrawn on Thursday after the administration "capitulated" and promised to act by Nov. 3.
Raw cane sugar traded in New York City Friday for slightly over 10 cents a pound. The 1977 farm bill, which President Carter signed into law last month, established a minimum domestic price of 13 1/2 cents. Officials said it appeared that sharply increased tariffs, and possibly tightened import quotas, will be required to raise prices to that level.
Chief economist Howard Hjort of the Department of Agriculture said such action "has the potential to give windfall profits" to refiners, importers and big sugar users who have built up large stocks in expectation of higher prices.
"We have to implement the farm bill," said Hjort. "It's the law."
Resolution of the sugar controversy will have a broad impact at home and abroad. At present, about five million tons of foreign sugar is imported a year, considerably less than the existing import quota of seven million tons.
Any sharp reduction in the quota would be felt in dozens of exporting countries, including many developing nations that depend heavily on sugar income. It could also be taken as a setback for President Carter's efforts to fight off protectionist currents in such industries as shoes, television sets and steel. Ironically, however, jobs at home could also be lost if sugar imports were cut too sharply, because a number of domestic refineries handle only imported sugar.
On Sept. 15, Carter announced a temporary income subsidy to help farmers who grow cane and sugar beets. It provides direct government payments to make up the difference between the 13 1/2-cents pound minimum and the money they actually receive.
That has the advantage of not affecting domestic sugar prices while compensating farmers, administration officials say. Agriculture Department officials, describing that measure as only temporary, said they plan to have a long-term program for boosting sugar prices by the end of the year.
Pressure to get prices up has been coming not only from farmers and cane growers but also from speculators and representatives of the powerful corn sweetener industry, a new agricultural glamor business.
Corn refiners, which include some of the fastest growing and most aggressive companies in U.S. agriculture, have invested hundreds of millions of dollars in new wet milling plants that manufacture a sweetener that competes with sugar in soft drinks, ice cream, jelly and jam.
Soft drink manufacturers, among the biggest sugar users in the country, have been turning to corn sweeteners. When sugar prices are low, as they now are, the corn sweetener makers have to cut prices to levels at or near what it takes to amortize their expensive new plants.
The current tariff on sugar is 1.875 cents a pound. Under existing law, it could be increased 50 per cent, and another "fee" up to half the world sugar price could also be added. World prices currently run between 7 cents and 8 cents a pound.
Major importers and exporters of sugar reached an agreement in principle last week in Geneva on the first international sugar agreement. It would set a world floor price of 11 cents a pound, and would stabilize prices through a complicated system of buffer stocks and quotas. It would have the effect of raising the price of sugar delivered to this country to about the support price of 13 1/2 cents.
However, U.S. participation must be ratified by the Senate, and it is unlikely that it could take effect until next year.