Sour Subsidies Underscore Need for U.S. Sugar Policy
For 2019-20, Louisiana sugarcane farmers produced approximately 40.45 percent of the total United States cane sugar production and 18.82 percent of total U.S. sugar production. We understand there’s a need to import foreign sugar to supply the entire American sugar market.
However, the widespread use of foreign government support and subsidies have contributed to a wildly unpredictable global sugar market. And foreign intervention only continues to rise as nations struggle to prop up their inefficient producers and deal with the overproduction spurred by these very same sugar subsidies. As a result, sugar exports are being dumped by dozens of countries on the world market at prices that are half the cost of producing it world-wide and well below their own countries’ internal consumer prices. These practices put a burden on Louisiana’s sugarcane farmers and millers.
The American Sugar Alliance recently reviewed all of the U.S. Department of Agriculture’s (USDA) 2020 Semi-Annual Sugar GAIN reports and compiled all mentions of the various ways more than 20 foreign governments intervene in their sugar markets into one convenient report.
State run companies. Direct payments. Export subsidies. Government-set prices.
These are just some of the sour policies used for such a sweet crop, especially when compared to America’s successful no-cost policy, which doesn’t rely on subsidies. And all of it is documented in this report.
Let’s look at a snapshot of recent developments affecting sugar sectors in countries around the world, including some covered in the aforementioned 2020 USDA GAIN reports.:
- Thailand approved a 10 billion baht bailout package for its sugar farmers – that amounts to approximately $323 million.
- India is reportedly moving ahead with a support package for its sugar industry, estimated to be in the $1.3-$1.6 billion range.
- A special Sugar Inquiry Commission in Pakistan recently released a report detailing the approximately $177 million in sugar subsidies that have flowed into the coffers of a handful of sugar mills since 1985.
- So many buyers rushed to get their hands on Brazil’s subsidized sugar, made sweeter by its devalued currency, that the country is currently dealing with a giant container ship traffic jam.
- Egypt – where most of the sugar processors are state-run companies – have flat out banned sugar imports for the next three months to protect their industry from the volatile prices on the world market.
- Russia has turned from a major world importer of sugar to a growing exporter, with the government having recently allowed for the establishment of sugar export associations to help facilitate further exports abroad.
Meanwhile, America’s strong no-cost sugar policy protects efficient American sugar farmers and workers and ensures that we maintain an affordable supply of this essential ingredient.
But if we were to unilaterally weaken or cripple this successful policy in the face of rampant subsidization, without passing the Zero-for-Zero Sugar Policy, the more than 142,000 sugar farmers and workers the American sugar industry supports would likely face bankruptcy.
After all, the multigenerational family farmers that grow sugarcane in three states or sugarbeets in 11 states, and all of the factory workers that process sugar, can’t compete against the billions that foreign treasuries dump into the market.
That’s why the American sugar industry is advocating that Congress pass Congressman Ted Yoho’s Zero-for-Zero Sugar Policy (H. Con. Res. 7) to put a stop to the wave of sugar subsides causing market turmoil. It’s a common-sense proposal that would only drop America’s no-cost sugar policy in exchange for the verified elimination of all foreign sugar subsidies.
It’s time for the Zero-for-Zero Sugar Policy.
Get the Facts
Only about 25% of sugar produced around the globe is traded on the world market because of the distortions caused by foreign subsidies.
More facts like these available here and on sugaralliance.org.