A collaborative analysis conducted by four agricultural economics professors at the University of Tennessee and Oklahoma State University has found that U.S. sugar prices do not impede the financial performance of sugar-using firms.

The analysis thoroughly examined, and rejected, the claim from sugar-using firms “that as the U.S. price of sugar increases relative to the world sugar price, this negatively impacts their profits.” As the authors note, their findings “suggest that U.S. sugar-using firms pass on higher costs to consumers when relative prices increase or do not pass on discounts to consumers when relative sugar prices decrease.”

This was on full display in the aftermath of the dumping of subsidized Mexican sugar on the U.S. market in 2013. Sugar prices plummeted, costing U.S. producers $4 billion and many sugar workers their jobs. Meanwhile, Americans paid higher prices at the grocery store for sweetened products and manufacturers pocketed the profits.

This report expands upon a well-known 2016 report published by Dr. Alexander Triantis, during his tenure as dean of the University of Maryland business school, and analyzes the financial performance of 26 publicly traded companies that use sugar primarily purchased in the United States. In his 2016 report, Dr. Triantis found that under current U.S. sugar policy, the nine largest publicly traded firms producing sugar-containing products had added jobs, increased production, and far outpaced the rest of the food processing industry in profit returns.

The full report prepared by the University of Tennessee and Oklahoma State University agricultural economists can be found here. This is an independent and peer-reviewed report for which no industry funding was received and which was originally published by Agricultural and Food Economics.

Dr. Karen L. DeLong, one of the report’s authors and an Assistant Professor of Agricultural and Resource Economics at the University of Tennessee, said that the analysis yielded conclusive results.

“The U.S. sugar program buffers domestic sugar producers against heavily subsidized foreign sugar, but sugar-using firms claim that this program maintains artificially high domestic prices and therefore decreases profits. The data show that when all other conditions remain the same, there is no evidence to support these claims,” DeLong said.

In fact, the analysis found the unexpected result that “as U.S. prices increase relative to world prices, sugar-using firms are more profitable.”

“America’s sugar farmers and workers are proud to provide our customers with more than 60 different types of affordable and sustainably produced American sugar,” said Jack Pettus, chairman of the American Sugar Alliance. “This analysis confirms what our industry has long known: the price stability provided by America’s no-cost sugar policy has no negative effect on the bottom line of sugar-using companies.”

Pettus continued, “The pandemic has highlighted the importance of essential products like sugar to be produced in the U.S. and delivered through reliable supply chains. America’s sugar farmers and workers need a strong no-cost sugar policy to give us a fighting chance against excess foreign imports that threaten our ability to produce sugar domestically.”

The chairman of the House subcommittee with jurisdiction over farm commodity programs said yesterday that the unique perspectives and bipartisanship of his panel help it function well for U.S. farmers and ranchers.

“The demographic and geographic diversity inside the House Agriculture Committee make it special,” Congressman Filemon Vela (D-TX) said at yesterday’s International Sweetener Symposium.

Each member has different experiences and priorities to share, which ensures that farm policies work better for the whole agricultural industry, not just a handful of crops, according to Vela, who chairs the House Agriculture Subcommittee on General Farm Commodities and Risk Management. And working with growers of all shapes, sizes, and specialties is a priority for the panel, he said.

“We held our first hearing back in May, and we brought in farmers from all around the country to talk about the general conditions of the farm economy,” he said. “What we learned is that no matter where they came from – we had farmers from California, Texas, Minnesota, Florida and elsewhere – folks are having a very difficult time.”

Some growers are being hit hard by overseas tariffs that have dried up markets, he explained. Others have struggled with weather disasters, are experiencing mounting financial pressures, and have faced losses that traditional risk management tools are not equipped to cover.

Vela said Congress was fortunate to pass the 2018 Farm Bill when it did, because delayed action would have left farmers with fewer tools to weather the storm. That bill included a continuation of America’s no-cost sugar policy, which Vela said is critically important to sugarcane farmers in his district.

“With respect to sugar policy…the approach of leaving well enough alone is the right approach,” he explained. The policy operates without taxpayer cost, and Vela said that he would continue to lead efforts to rebuff any political attacks on sugar farmers in the future.

Similar sentiments about sugar policy were made by lawmakers throughout this week’s meetings, which underscores the thesis of Vela’s speech. Members of the Agriculture Committee are listening to the priorities of their colleagues and are reaching across the aisle to come together on behalf of all farmers, not just those in their districts.

Congressman David Rouzer (R-NC) predicted significant turnover during the 2020 congressional election, and he encouraged agriculture to use the opportunity to work together to educate new lawmakers about the industry’s importance to America’s future.

“Agriculture is a bright spot, and we need to talk more about what we do,” he said at today’s International Sweetener Symposium. “A country that can feed itself and feed the rest of the world is in a dominant position to be prosperous at home and strong abroad.”

Agriculture is an economic powerhouse that creates jobs, provides opportunities in rural communities, and embodies the values that make America great, said Rouzer, a member of the House Agriculture Committee. But not everyone in Congress will understand its importance unless farmers and ranchers speak proudly about their successes and fight for their interests.

Rouzer noted that agriculture’s future success will depend on good farm policies with bipartisan appeal, as well as unity throughout the farm and ranch community. The overwhelming support of the 2018 Farm Bill, he said, was emblematic of what agriculture can accomplish when everyone comes together for the common good of all.

“It’s so critically important for us to remain united with one voice and remain active politically,” he said, explaining that the geographic diversity that agriculture possesses is an asset that can mobilize elected officials from both parties across the country.

Sugar is a good example of the power of a large geographic footprint, he said, because it brings together lawmakers from Midwestern sugarbeet states and sugarcane in the South. It’s little wonder, Rouzer noted, that no-cost U.S. sugar policy remains a fixture in the farm safety net.

“Hanging together and speaking with one voice is critically important to [sugar producers’] ability to protect your interests long term,” he concluded. “As long as I’m in the House, you’ve got a friend here and you always will.”

“I’m proud to stand tall with [U.S. sugar producers] every single day …and I appreciate what you stand for.” That was the message Congressman Richard Hudson (R-NC) delivered at today’s International Sweetener Symposium.

Hudson, who co-chairs the Agriculture and Rural America Task Force, said America’s sugar industry supports thousands of U.S. farmers, thousands of U.S. workers, and billions in goods and services to the U.S. economy. So, supporting a strong U.S. sugar policy was an easy decision for him in the last Farm Bill.

“I want my sugar made here in America,” he explained, noting that he’s worked hard to defeat past attempts to weaken the country’s no-cost sugar policy.

“It would have crushed our domestic industry,” he said of a 2018 Farm Bill amendment designed to gut U.S. sugar policy and outsource our sugar production. “Foreign countries are subsidizing their industries, dumping their sugar, and bottoming out prices…that’s not a free market.”

That anti-farmer amendment was soundly defeated, which Hudson credits to the hard work of sugar producers, farm policy’s bipartisanship, and the solidarity of the agricultural community.

Agriculture is the top industry in North Carolina and in Hudson’s district. He emphasized the importance of agriculture continuing to work closely together to overcome current economic challenges and future political fights.

“I’ve worked hard to be a partner with you and everyone else in our agriculture community,” he concluded. “I strive to be someone you can count on, and I look forward to continuing that partnership.”

Congressman Glenn “G.T.” Thompson (PA), the second highest ranking Republican on the House Agriculture Committee, kicked off the 2019 International Sweetener Symposium this morning by telling sugar producers that his vision for the Committee’s future is to “achieve a robust rural economy.”

“This requires the right farm policy for all our commodities, including sugar, that exceeds the expectations of our farm families,” he said. “If we can exceed your expectations, then rural America is going to do quite well.”

Thompson, who is the Ranking Member of the House Agriculture Subcommittee on General Farm Commodities and Risk Management, explained that he would continue to be a vocal supporter and champion for the country’s sugar producers.

Sugar policy is part of the 2018 Farm Bill and attempts to weaken it by a handful of opponents during debate on the House floor were summarily rejected thanks to Thompson and others.

“We defeated efforts to repeal the sugar program with a remarkable 141-vote margin,” he said. “That type of decisive [vote] should resolve once and for all that our current U.S. sugar policy is good for both the American consumer and for our hardworking sugar producing farm families.”

Thompson thanked the audience for their efforts to help secure a Farm Bill that was passed on-time, and he pledged to continue to fight attempts to weaken sugar policy in the next Farm Bill.

No-cost sugar policy, which is based on loans that are repaid with interest, is particularly important given the heavily subsidized nature of foreign sugar production, he noted.

In addition to maintaining a strong farm safety net, Thompson outlined other areas that he thinks are important for the House Agriculture Committee and Congress as a whole.

“The greatest challenges before agriculture are regulatory reform and resolving trade agreements,” Thompson explained. “Tackling both of those areas will help our farmers compete on a level playing field.”

Thompson also pointed to rural development and expanded educational opportunities as key to helping small towns rebound from current economic challenges and thrive.

A new report analyzing the impact of sugar policy liberalization in the European Union (EU) should serve as a dire warning to those who would like the United States to follow the EU’s lead and unilaterally eliminate U.S. sugar policy without addressing subsidies on the world stage.

This week marks 13 years since the EU first began tearing down its sugar program after the World Trade Organization found it to be in violation of its international trade commitments. Since that time, Europe’s sugar industry has faced an uncertain future – 83 sugar mills closed and 120,000 jobs were lost – and subsidies remain prevalent as prices plummet below the cost of production.

Authored by UK-based sugar policy expert Patrick Chatenay, this report takes a closer look at EU sugar market conditions following the latest chapter in EU’s reform: the end of sales quotas and minimum prices for sugar in October 2017.

“The immediate effects of liberalization have been catastrophic for the EU sugar industry,” Chatenay writes.

Chatenay found that now exposed to the oversupplied and chronically depressed global sugar market, driven by foreign subsidies, sugar farmers have seen an approximately 20 percent drop in prices while large industrial sugar buyers have pocketed $3.4 billion, “with no discernable advantage to the final consumer.”

This transfer of wealth from farmers to food processors has necessitated additional taxpayer subsidies to help prop up Europe’s farmers.  Totaling nearly $700 million a year, EU subsidies have further distorted Europe’s sugar market and driven prices even lower, according to Chatenay.

“EU sugar now operates with fluctuating, distorted and most often depressed world market prices, influenced by widespread government interventions,” the report states. “Not only must its most efficient producers compete with foreign subsidized sugar, but they also face competition from subsidies directed to [less efficient] EU beet areas.”

And this unfair competition is further threatening efficient EU producers and forcing them to cut costs by shuttering factories. Chatenay quoted one official as saying that “10 to 20 sugar [EU] factories will close within 5 years, given that about one-fifth of the EU mills are not competitive.”

Europe’s failed experiment over the past decade should serve as a stark warning to critics of U.S. sugar policy, say officials from America’s industry.

“Europe is often held up as a model for sugar reform, but the facts tell a much different story,” said American Sugar Alliance Chairman Ryan Weston. “European taxpayers continue to spend millions propping up the sugar industry while farmers face bankruptcy. Simply put, unilateral disarmament doesn’t work. A free sugar market will only be realized when every nation agrees to put an end to unfair subsidies that threaten highly efficient U.S. producers”

A recent report released by Texas Tech University put into perspective the harm that widespread government intervention has had on the global sugar market. The report profiled 22 foreign countries, accounting for 80 percent of global sugar production, and documented the widespread use of government support, tariffs, and subsidies that contribute to an unpredictable market.

Conversely, American sugar farmers do not receive government subsidy checks. U.S. sugar policy is based on the use of loans to store sugar until customers need it and then the loans are repaid with interest. This allows the sugar industry to maintain a reliable and affordable supply of sugar for U.S. manufacturers and consumers alike.

“The EU’s struggle to reform its sugar regime makes it clear that the distorted nature of the global sugar market as it stands will never allow for fair competition,” Weston said. “That is why America’s sugar producers are asking Congress to call a global cease-fire on sugar subsidies by passing Congressman Ted Yoho’s Zero-for-Zero resolution. We look forward to the creation of a truly level playing field.”

Members of the American Sugar Alliance (ASA) praised Congressman Ted Yoho (R-FL) for taking decisive action against foreign sugar subsidies with yesterday’s reintroduction of the Zero-for-Zero sugar policy.

Zero-for-Zero proposes dropping America’s no-cost sugar policy in exchange  for the verified elimination of foreign sugar subsidies.

H.Con.Res. 7 details how foreign subsidies distort the international sugar market and hold prices well below the average cost of producing sugar. It specifically highlights Brazil, India, Thailand, Europe and Mexico for their egregious abuse of direct and indirect subsidies.

The billions spent by foreign nations stand in stark contrast to America’s sugar policy, which costs taxpayers $0 because it’s based on loans that are repaid with interest.

“America’s sugar producers are among the most efficient in the world, but it’s hard to compete with the treasuries of foreign countries,” said Ardis Hammock, a farmer from Clewiston, FL. “It will be impossible to establish a true free market in sugar unless these unfair subsidies are eliminated, and Zero-for-Zero recognizes that basic fact.”

Ardis grows sugarcane with her husband and son on a farm that’s been in her family for three generations. She’s proud of what her family has accomplished over the past 100 years but is worried about the future as prices remain low and foreign governments fuel overproduction. 

“Our no-cost sugar policy gives us a fighting chance to survive until reform to the world market materializes,” she said. “Congressman Yoho’s plan is common-sense legislation that says we’re not going to let foreign cheaters run hardworking Americans out of business.”

Unilaterally eliminating or weakening the current U.S. sugar policy without concessions from foreign nations would collapse the domestic sugar market, endangering 142,000 industry jobs and putting consumers at risk of foreign dependence.  

The American Sugar Alliance urged Congress to move quickly on Yoho’s effort.

Original co-sponsors of the Zero-for-Zero policy include Reps. Garret Graves (R-LA), Alcee Hastings (D-FL), Clay Higgins (R-LA), Walter Jones (R-NC), Paul Mitchell (R-MI) and Alex Mooney (R-WV).