In the opening round of what promises to be a bruising political struggle over sugar policy. Sen. George McGovern (D-S.D.) yesterday released a government report pointing to errors and overpayments in an earlier administration program.
The report detailed "at least" $10.4 million in ineligible sugar price support payments in 1977, $58.5 million in ineligible loans to four processors and reporting errors resulting in more than $430,000 in overclaims.
The study, dated last Oct. 25, was made by the inspector general of the Department of Agriculture.
McGovern said in a statement that the report "increases my deep concern" over the consideration the administration is giving to a similar program for this year.
Agriculture Department economist Howard J. Hjort said he had not read the report.
Under the payments program that was in effect for part of 1977, beet and cane growers were compensated by the government when sugar prices fell short of a 13 1/2-cent-a-pound minimum.
Unlike the traditional farm price supports, this program did not increase sugar prices for industrial and wholesale sugar consumers. Administration support for the payments method has been based on the desire to avoid raising sugar prices.
However, the payments plan, which was halted by Congress in 1977, has been strongly attacked by one powerful segment of the U.S. sweetener industry as well as by some farm groups.
These groups favor the present price support program, in which the government buys up excess supplies at a price that is currently set at 14 3/4 cents a pound.
Actively lobbying for the present price support program are representatives of the corn sweetener industry which processes corn into products that compete with refined sugar and beets for a place in candy bars, soft drinks and bakery goods.
Food companies have invested hundreds of millions of dollars in Midwest corn sweetener plants in the last decade. They favor a higher market price for sugar because this makes their sweeteners more competitive.
With nearly 10 percent of the U.S. corn crop going into starch and sweetener refineries, there is also support from corn farmers for higher sugar price supports.
Representatives of the industry charge privately that the administration favors the payments plan because it would hold prices down for giant industrial users -- such as Georgia-based Coca-Cola.
Hjort said yesterday he had "heard these reports," but he added that "nobody has been able to find any factual basis" for a connection between Coca-Cola and administration sugar policy.
McGovern, who is up for election again in 1980, is acting chairman of the Senate Agriculture Committee, which will have a key role in drafting legislation to replace the sugar law expiring this year.
Under the present law, the government has bought some 176,000 tons of unsold sugar from the 1977 crop to support the price.