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American Sugar Policy: It Works!

Cutline: Raw sugar produced by Louisiana sugar mills is stored in warehouses until the commodity is sold.

The American sugar industry that was born in Louisiana in 1795 continues to this day to be a major economic driver for the Bayou State as well as the other sugarcane and sugarbeet growing states.

But a new bill sponsored by the congressional legislators from Hershey, Pennsylvania and other candy-making states would destroy the American market if allowed to become law.

By Jim Simon

The legislation, dubbed the Fair Sugar Policy Act is anything but fair. Its sponsors (Sens. Pat Toomey, R-Pa. and Jeanne Shaheen, D-N.H.,  and Reps. Virginia Foxx, R-N.C., and Danny Davis, D-Ill.) say it “would eliminate marketing allotments; provide more flexibility to the Agriculture Department to ensure an adequate sugar supply to the domestic market; provide for the temporary transfer of unused import quotas to other countries with import quotas; and repeal the Feedstock Flexibility Program and make other changes to the program.”

Note where Senator Toomey is from:  Pennsylvania, the home of Hershey candy.

Senator Toomey, et al., are mistaken. The American sugar market would collapse under their proposal. Here’s why. The domestic market for American sugar is stable and, while we’re basically getting the same price we received in the 1980s, we’ve been able to produce more sugar because of technological improvements and overcome flat pricing by the slimmest of margins.

Sugarcane production in Louisiana is well into its third century and supports the state’s 11 sugar mills, two which are cooperatively owned. It also supports hundreds of family farms. We have a solid, locally owned sugarcane industry, and our product is sold and consumed by Americans. It is not exported. In fact, the United States must import some foreign sugar to satisfy the national demand.

Under the terms of the North American Free Trade Agreement (NAFTA), Mexico has the first right to fulfill the unmet U.S. demand. We also have treaties with 40 countries, mostly from Central America, South America and the Caribbean, to supply the U.S. with sugar. Many sugar-producing countries in tropical regions produce more sugar than they can consume and try to sell their excess sugar for the best price. Countries that have sugar treaties with the U.S. get the best price because American buyers don’t overbuy. That’s why the United States market is stable.

The big candy makers (and congressional members who represent them) want to change U.S. sugar policy and allow more “world market” sugar into the country. The problem is the world market is a dump market. The dump market is supplied by countries that heavily subsidize their sugar industry with direct payments to producers. What that means is any country who produces more sugar than they can profitably sell in normal markets dump their excess sugar at unsustainable prices.

If the U.S. bought all of its sugar from the government-subsidized world market, it would put every sugarcane farmer from New Iberia, Franklin, Lafayette, Thibodaux, Breaux Bridge, Napoleonville, Bunkie, New Roads, Patterson and all points in between, plus every sugar mill (some of which have been operating for more than 100 years) out of business.

Don’t take my word for it. Just look at what happened to Europe.

Thirteen years ago, the European Union changed its sugar policy and exposed Europe’s market to the government-subsidized, oversupplied and chronically depressed global sugar market. The result? 83 sugar mills closed, and more than 120,000 sugar jobs were lost because their prices fell below the cost of production. Who profited? You got it: the large industrial sugar buyers and food processors who have pocketed more than $2.5 billion annually with no discernable benefit to the average grocery shopper. And now because their market has collapsed, European sugar farmers are receiving more than $700 million a year in subsidies to keep their production up.

The rural economy, including America’s sugarcane and sugarbeet farmers, is suffering from the negative effects of a prolonged recession and depressed commodity prices. The United States Department of Agriculture provides a minimum safety net to help producers in case of drought and other natural disasters. How much does this “minimum safety net” for Louisiana’s sugar producers cost, the one that Hershey candy wants to change? Zero. That’s right, not one penny. That’s why it is easy to defend the USDA’s sugar policy. If it is managed correctly, it doesn’t cost the American taxpayer a thing.

The so-called Fair Sugar Policy Act is anything but fair to Louisiana sugarcane farmers. It is nothing more than another version of an anti-farmer amendment that was soundly defeated by a 141-vote margin just last year. It seems clear that Congress supports America’s sugar farmers and U.S. sugar policy and we are grateful. However, we will remain vigilant and oppose any attack on good farm policy.

Editor’s note: this is a corrected version of this press release which was previoulsy published on this site  Oct. 8, 2019.

Jim Simon is the manager of the American Sugar Cane League. The League was formed in 1922 and is a non-profit organization of Louisiana sugarcane growers and processors. We are dedicated to supporting the Louisiana sugar industry through research, legislation, product promotion, education and public relations

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