Did Brazil’s Ag Minister Just Ask for Subsidy-Free Markets?

In an abrupt about-face, Brazil’s Minister of Agriculture Blairo Maggi recently condemned the kind of Brazilian subsidization that has, for decades, wrecked the world’s sugar market.

“Subsidy attracts incompetence in some areas, and doesn’t allow the sectors to succeed through competitiveness,” he was recently quoted as saying in an Aug. 25 article that appeared in SugarOnline.com.

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.

University of Maryland Economist Details Business Returns Under Current Sugar Policy

For Immediate Release: April 18, 2016
Contact: Phillip Hayes, 202-507-8303

WASHINGTON – Since the current U.S. sugar policy took hold in 2008, candy companies and producers of other sugar containing products (SCP) have added jobs, increased production, and boosted profitability, according to a new study by the dean of the University of Maryland’s business school.

Dr. Alex Triantis, who prepared the report for the American Sugar Alliance (ASA), wrote: “During 2009-2014 – a period that included a U.S. economic recession and unusually high world and U.S. sugar prices – SCP industry jobs rose by 3 percent while non-sweetened-food industry jobs were flat.”

This Week in the News

With so much going on in the world this week, chances are good that you missed a handful of important – albeit not-so-widely-read – sugar stories. So, we’ve flagged them for you and offered a little context.

The volatile world sugar market reminded us once again why it cannot be trusted to provide stable supplies. As Reuters noted in an April 1 article:

A Proud History Worth Continuing

“It will not be doubted that with reference either to individual or national welfare, agriculture is of primary importance…” George Washington said that.

Similar quotes by great leaders have been sprinkled throughout the history of our proud nation ever since, and their words make clear just how important farmers and ranchers are to America’s economy, security, and way of life.

Major Sugar Exporters Seek Global Subsidy Reform, U.S. Critics Fixate On Unilateral Disarmament

In an amazing twist, some of the world’s biggest sugar subsidizers signaled a desire to start a conversation about rolling back global subsidies to help make the market freer and fairer.

Sounds promising, except for the fact that a couple of vocal U.S. politicians were simultaneously signaling their desire to simply end U.S. sugar policy and reward subsidizers with more U.S. market share, thus foregoing any chance of worldwide reform.

Stakes On The Global Stage Are High. So Let’s Focus On…Sugar?

The President of the United States is in Europe discussing a global climate accord, which will hold economic and political ramifications for generations to come. Foreign allies are debating enhanced military involvement in the war on terror. Violence has gripped many U.S. cities. Racial tensions are flaring. A leading measure of U.S. manufacturing just fell to its lowest level since the recession, and overall business investment is slumping, dragging down the economy.

And at least two DC figures – Republican Congressman Joe Pitts and Grover Norquist – are screaming at the tops of their lungs this week that Congress must drop everything and focus on one key issue immediately: U.S. sugar policy.