Supply Controls: A Comeback in Unexpected Places?

July 14. 2000

Production controls for most commodities were abolished by the 1996 "Freedom to Farm" law, and there is little likelihood that they will be revived soon. But within the past week, supply management seemed to make something of a comeback – though not for the commodities that might first come to mind.

The Agriculture Department decided that cranberry growers will have to cut marketings by 15% to fight growing surpluses. The decision was announced despite the fact that the public comments USDA got on the issue opposed production controls by 78-55.

And though no announcement has been made yet, rumors have been flying that USDA may use an obscure, 15-year-old law to offer an in-kind paid diversion program to sugar producers. Production controls for sugar were authorized in the 1990 farm bill but repealed, with grower support, in 1996. The diversion, under terms of the law, would cap payments at $20,000, and the payments could only be government-owned sugar, not other commodities. Despite these apparent obstacles, industry sources believe a "sugar PIK" (payment in kind) is a live option.