Government Intervention
The massive Brazilian sugar-ethanol program, built on decades of huge government subsidies, dominates the world sugar market.
Since the early 1990s, Brazil has used the ethanol program to increase sugar exports from less than 2 million metric tons to nearly 20 million tons. Over that time, its share of the world sugar market jumped from 4% to more than 40%.
This breakneck expansion has been the single biggest factor in depressing world dump market sugar prices. These low prices cause all sugar exporters to suffer, especially poor countries.
The economic benefit to sugar producers from the ethanol program is estimated at $1 billion a year.
The Brazilian government provides more than $200 million a year in direct subsidies to select sugar producers. In comparison, U.S. sugar farmers receive $0 from the government.
Indirect subsidies—including $2.1 billion in debt forgiveness, plus preferential loan rates and massive currency devaluations—have also aided Brazil 's sugar expansion.
Brazil , an agriculture superpower, still defines itself as a "developing" country in WTO negotiations to protect these subsidies and to avoid reform.
Labor and Environmental Standards
The average Brazilian sugar worker earns 58 cents per hour and child labor remains an issue in the country.
Even though the country has some environmental laws, it lacks an adequate monitoring program to track and curb pollution discharged by sugar mills and farms.
Production and Price
By far the world's largest sugar player, Brazil produces 28 million tons of sugar. That's almost four times U.S. production.
Since 1990, Brazil 's share of the dump market has increased tenfold. Today, the country exports 17 million tons a year—that's more than the next six largest sugar exporters combined.
In 2004, wholesale prices in Brazil were 8 cents per pound and retail prices were 17 cents per pound.
Trade with America
Brazil is one of the 41 countries from which the United States imports sugar, and is America 's second largest foreign supplier under the WTO-mandated market access commitment. The United States is forced to accept this sugar whether the market needs it or not.
The U.S. market is already oversupplied with subsidized foreign sugar, which drives down prices, forces sugar facilities to close, and threatens 146,000 U.S. jobs. Efficient U.S. sugar farmers cannot afford to trade away more of their market to Brazil.
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