Foreign subsidies make sugar the world’s most distorted commodity market.
In fact, current world-market sugar prices are below production costs for 90% of the world’s producers, meaning growers in Brazil, India, Thailand and elsewhere would lose money on every trade if not for government handouts.
These subsidies and the resulting artificially-depressed nature of the global market are exactly why America has a no-cost sugar policy, which smooths out market volatility and operates on loans repaid with interest rather than subsidy checks.
Now, agricultural critics are looking to cut U.S. sugar farmers out of the Farm Bill, effectively leaving them vulnerable to a new slew of foreign trade abuses and falling prices.
The Wall Street Journal reported this week on current market conditions that would likely bankrupt many U.S. producers if not for the Farm Bill.
“For sugar, there’s no sweet ending in sight after a long period of declining prices,” it wrote. “And analysts forecast another surplus next season, which begins in October, suggesting a recovery in sugar prices is a long way off.”
Analysts told Reuters that subsidized overproduction in Europe, India and Thailand have led to the glut, which may not start to correct itself until 2020.
And as global sugar prices have reached three-year lows, America’s competitors are scrambling for help. How have their governments handled it? With more price-suppressing subsidies, of course.
European sugar farmers just saw new subsidy checks kick in, with annual payments of $665 million expected by 2019. Even with the aid of taxpayer dollars, European news outlets are reporting, “EU sugar companies struggle to survive as prices plunge.”
The moves are not surprising. As Reuters explained in an article about Indian subsidies, “The government is keen to placate India’s 50 million cane growers, who make up an influential political lobby, especially with national elections barely a year away in May 2019.”
America has a lot of farm families affected by low prices, too. In fact, sugar prices in America are lower today than in 1980.
But rather than supplying them with the tools needed to weather the current economic storm, some lawmakers and candy company lobbyists are looking to bankrupt them with a new proposal designed to flood the U.S. market with even more subsidized imports.
One farmer who has made a trip to DC to defend his way of life summed up the situation well.
“We’ve grown sugar in Louisiana for more than 250 years. And if we didn’t raise sugar, the only thing we’d grow around here is the unemployment line,” explained Pete DuFresne of Paulina, Louisiana. “It’s sad that some people want to end that history and outsource U.S. sugar production to subsidized foreign industries that use child labor and don’t care about the environment.”
Yes it is, Pete. But apparently some folks want to punish hardworking U.S. farmers by rewarding foreign cheaters.