India’s Farmers Exploit Tax Loophole Subsidy

India’s government sets high sugar prices for its farmers, subsidizes mills to pay farmers the inflated prices, blocks competing imports, offsets farm input costs with subsidies, extends no-interest loans to cane millers, forgives many of those no-interest loans, and subsidizes exports to give its sugar producers a leg up on the world market. If you…

India’s Export-Import Yo-Yo

Later this week, the CATO Institute – a perennial critic of no-cost U.S. sugar policy – will host an event to applaud India’s economic reforms of the past 25 years. The event’s online flyer touts India’s “miracle economy,” which was realized after it “abandoned its traditional socialist policies and embraced economic liberalization and globalization.” Perhaps…

A Strong Farm Safety Net is Essential Right Now

During debate of the 2014 Farm Bill, many ag leaders reminded farm policy detractors that farm bills were written for the bad times not the good.

Back then, commodity prices were strong, farm incomes were up, farmland values were at all-time highs, and the global demand outlook was bright. Even though farm policy was operating well under budget because of a resilient rural economy, critics didn’t understand the need for a safety net and even championed gutting farm supports, including no-cost sugar policy.

Attaboy, Attachés

Ahhh…spring is in the air. Birds are chirping, the sun is shining, blooms are blooming, farmers are planting, and the USDA is busy releasing attaché reports.

Ok, that last one isn’t exactly a springtime staple, but it does occur like clockwork every April, and these reports often go unnoticed despite their importance.

What Goes Up Doesn’t Always Come Down

The price that U.S. grocery stores pay for sugar peaked in 2010 after shortages hit the global market and needed imports were difficult to attract. As a result, grocery stores charged shoppers more for bagged sugar at the checkout line in order to maintain their profit margins.

But market conditions quickly changed. Foreign exporters increased production with the aid of subsidies, turning shortages into surpluses, and prices on the world and U.S. sugar markets fell rapidly. However, the price that shoppers pay didn’t follow suit. Instead, it continued to climb.

World Price Volatility Continues. So Do Subsidies.

Back in 2007, raw sugar prices on the world market averaged just shy of 10 cents per pound.

To put that figure into perspective, the global average cost of producing a pound of raw sugar was more than 17 cents.

Yes, the price was low and producers were losing money on every pound of sugar sold. But amazingly, it was up more than 10% from the 8.8 cents per pound it averaged the decade before.