PIK Program

September 13, 2000

Say it isn't so! Not the PIK program again. Yes, that's what it is. This time for sugar. I really thought PIK (payment in kind) was history. But I guess not. We have too much sugar and with the loan rate where it is, it appears the sugar processors are going to forfeit at least 500,000 tons of sugar to the government. Secretary Glickman does not want the sugar. He already owns 125,000 tons. The sugar beet farmers are about to harvest another big crop. I introduce you to payment in kind. Give the fanners 400,000 tons of that unwanted sugar and in return they agree to not harvest 120,000 acres of their crop. Like a silver bullet, the burdensome sugar supplies are reduced. Com prices are helped because with 7 or 8 percent of the sugar crop destroyed, more com will be needed for corn sweetener.

Sounds like the perfect solution. Still, it just doesn't seem right to destroy a crop that you have invested so much in growing. It's not quite the same as simply taking some land out of production for a year to avoid adding to the surplus. That's what we did in 1983 when PIK was born. We had a huge corn surplus when the year began, but not at the end of the year. Not only did PIK retire a lot of acres, cutting production, but God joined the PIK program with the worst drought in 20 years. Com prices soared. Since the program for sugar only affects 120,000 acres, and a small number of farmers, I don't think it sets a precedent for such action against com. I'm still surprised to see Secretary Glickman pull out of the Ag playbook my PIK program.