ShareThisEUCLID, Minn. - Paul Rutherford stared over his tilled fields of sugar beets, his gaze focused on hundreds of acres in the midst of harvest.
As heavy machinery plucked beets from the ground, they emerged a dull shade of tan. In Rutherford's eyes, they looked as good as gold.
Across this stretch of the Red River Valley, sugar beets have become an almost can't-miss moneymaker because of federal price protections that go back decades.
"These babies have always shown some type of profit," said Rutherford, one of about 2,800 farmers who make up the American Crystal Sugar cooperative, based in Moorhead, Minn. "If it wasn't for sugar beets, I wouldn't be farming."
With roughly 500,000 acres of sugar beets planted across Minnesota and North Dakota, American Crystal Sugar is the nation's largest producer of refined sugar through beet farming. It generates 15 percent of the country's sugar supply.
But much of the cooperative's financial success is cultivated in Washington D.C.
American Crystal Sugar has become one of the country's most powerful lobbying groups, doling out cash contributions to lawmakers at levels approaching big-business groups like the American Bankers Association. And it's all for a single objective: To guarantee tariffs and price supports allow sugar beet farmers to make money, even if it drives the cost of sugar above the global market.
"They're considered one of the strongest lobbies there is," said Larry Graham, president of the National Confectioners Association, a candy-makers group that has fought in vain against the sugar program.
Price supports for beet sugar inflate sugar prices for food makers and restaurants, costs the food industry often passes on to consumers in everything from candy and cakes to cereal and soda pop. Some economists estimate that Americans pay at least $1 billion more for sugar a year than they would in an open market.
"There is no justifiable public good being served by the sugar program," said David Orden, an economist at the International Food Policy Research Center.
But the sugar industry and its supporters say the sugar program -- unlike most farm subsidies -- involves no government payments and keeps consumer prices stable. "It's a stable industry, and that's what's needed in this country, something stable," Rutherford said.
To protect sugar subsidies, American Crystal's political arm gave $1.16 million to 177 House and Senate candidates in 2011, and spent more than $1 million for lobbying.
For many politicians, the co-op makes a persuasive argument, particularly in Minnesota where more than 30,000 residents owe their livelihoods to sugar beet farming.
Kevin Price, American Crystal's principal lobbyist, belies Washington's well-heeled "influence industry."
A graduate of North Dakota State University, Price doesn't have his own suite. He has an office in the National Council of Farm Cooperatives' space. There's just enough room for a desk, shelves for books and mementos and a few prints of farm scenes on the walls.
Washington insiders know Price as a man of few words.
Two or three times a year, Price leads a group of American Crystal Sugar farmers who blitz Capitol Hill. They try to meet face-to-face with dozens of members of Congress or their staffs in the course of a week. "We just try to make friends," Price said.
American Crystal Sugar is especially generous with members of the House Agriculture Committee, which plays a key role in food policy and the five-year farm bills that set out subsidies. In 2011, the cooperative contributed to 37 of the committee's 46 members. More than half of the committee, including chairman Frank Lucas, R-Okla., and Minnesota Rep. Collin Peterson, the ranking minority member, received $10,000, the maximum donation allowed in an election cycle.
Opponents of the sugar program acknowledge American Crystal succeeds because of its singular focus, deep pockets and hard work. Graham, who heads the confectioners association, said he has rushed to introduce himself to new representatives and senators, only to discover that officials from the co-op have been there first.
Since 1995, a dozen bills to kill or reform the federal sugar program have died from inaction in the agriculture committees of the House and the Senate.
Currently, four new bills to end the sugar program linger in legislative limbo. Officials at American Crystal Sugar don't expect any of them to pass.
"We've enjoyed pretty broad support," Price said.
Even as members of Congress from both parties hail opening markets to foreign trade, recent trade deals that killed many tariffs with Panama and Colombia still allow the American government to pay those countries not to ship their sugar here untaxed.
When it comes to free trade, sugar is always the exception, said George Washington University economist Steve Suranovic.
The U.S. sugar program -- a combination of loan programs, tariffs, quotas and other price supports -- almost guarantees American sugar producers can sell their entire yield at a profitable price. Tariffs, for example, require food makers to pay higher taxes for imported sugar, ensuring that the world's 40 major sugar-exporting countries can't sell as much in the United States as they would like.
As a result, American consumers and companies generally pay more for sugar than they would in a more open market. The average wholesale price for a pound of refined sugar in the U.S. (36 cents) was almost double the average worldwide price (19 cents) from 2006 through 2010.
The federal government supports domestic sugar producers in other ways, too. The U.S. guarantees loans by allowing producers to borrow money from the government that can be repaid in sugar instead of cash, if the market crashes.
Supporters of the U.S. sugar program say the outcome is predictable and positive -- stable prices for consumers. "You know the price of gas because it's volatile and high, you don't know the price of sugar because it's not volatile and high," said David Berg, CEO of American Crystal Sugar.
"Unilateral disarmament" of sugar protections, as Berg put it, would lead to a "whipsaw" effect for consumers that won't guarantee lower sugar prices. Peterson agreed, noting that numerous countries protect their own sugar producers.
"The world sugar market is distorted by government involvement in almost every country," he said. "It's not realistic to pretend there is a free market out there."
Details onAmerican Crystal Sugar political contributions:
Donors to American Crystal Sugar: http://www.startribune.com/business/133159083.html
American Crystal Sugar contributions to candidates: http://www.startribune.com/business/133160343.html
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
Editors: This story is for print use only. Must credit Minneapolis Star Tribune
