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.

Promises Kept or Promises Broken?

Congress made a promise to rural America when it passed the 2014 Farm Bill, which was the bi-partisan product of more than three years of careful deliberation and 40 hearings.

Although the 2014 Farm Bill reduced spending by $23 billion, lawmakers promised farmers that the bill would still provide them a strong five-year safety net to manage extreme weather and wild price swings caused, in part, by foreign subsidies and market manipulation.

Peculiarities of Presidential Politics

The road to the White House is long and twisting indeed, and it has taken some unusual turns so far. Candidates have discussed fantasy football, their undergraduate college years, competitors’ physical appearances, who’s really the most successful, inheritances, and who saw whom in the green room before a television appearance.

Little of this noise affected agriculture though, until this week’s Republican Presidential debate made an unexpected detour down a rural country road. Sen. Ted Cruz (R-TX), a well known opponent of agriculture (including ethanol and crop insurance), amazingly proclaimed that he wanted to reopen the Farm Bill and end U.S. sugar policy in order to boost defense spending.

We See Your True Colors Shining Through

The past couple of weeks have been challenging, gratifying, and enlightening for the agricultural community.

Challenging in that an 11th hour, secret deal struck as part of a budget package contained crippling cuts designed to gut the crop insurance system on which so many farmers depend. In other words, the five-year contract that Congress signed with rural America as part of the 2014 Farm Bill would have been ripped to shreds before its effects were ever really felt.

Gratifying in that farmers from coast to coast quickly joined forces to lock arms and fight back when attacks surfaced. First, in a herculean lobbying effort to effectively beat back crop insurance cuts. Then, in sending a clear signal to anti-farmer forces angling to reopen the Farm Bill to target U.S. sugar policy.

Candy Profits Are Scary Good This Halloween

In the early 1900s, the candy industry was starting to see big sales around Christmas and Easter. But there was a gaping hole in the fall sales season. So industry leaders hatched a plan in 1916 to boost profits in October.

They concocted a holiday called (not so subtly) “Candy Day.” The Atlantic wrote an article all about Candy Day in 2010, and the publication unearthed some interesting materials from the National Confectioners Association, including these little ditties from 1916:

Sugar Producers Call for End of Global Subsidies at Congressional Hearing

FOR IMMEDIATE RELEASE:
October 21, 2015
CONTACT: Phillip Hayes
(202) 271-5734

WASHINGTON—During a House Agriculture Committee hearing about foreign agricultural subsidies today, U.S. sugar producers publicly pledged to scrap U.S. sugar policy if other countries would stop manipulating the global sugar market with trade-distorting policies.

“Absent government intervention, the world sugar price would rise to reflect the cost of producing sugar, and America’s efficient producers could compete well on a level playing field,” said Jack Roney, director of economics and policy analysis for the American Sugar Alliance. “We have endorsed a congressional resolution to eliminate U.S. sugar policy when foreign countries eliminate theirs.”

U.S. Government Rules Against Mexican Sugar Industry in Trade Case

FOR IMMEDIATE RELEASE: October 20, 2015
CONTACT: Phillip Hayes, 202-507-8303

WASHINGTON — The U.S. International Trade Commission (ITC) agreed today by a 6 to 0 vote that Mexico’s sugar industry harmed American producers by dumping subsidized sugar onto the U.S. market.

The verdict means that an accord signed by the U.S. and Mexican governments to establish a needs-based trading structure and stop Mexico’s abuses will remain in effect for at least five years.

Sugar Policy Critics Raking in the Dough

Ever since debate over the most recent Farm Bill began, large food manufacturers have been crying poor. It’s been the same old story since the debate began around 2011, and it continues even today as these companies lobby to reopen the recently passed Farm Bill.

Sugar policy, these critics say, is causing them financial pain, and the only way to rectify the situation is to outsource U.S. sugar production and let heavily-subsidized foreign producers flood the market with cheap sugar.

U.S. Sugar Producers Comment on TPP Deal

WASHINGTON—The American Sugar Alliance issued the following statement about today’s announcement that an agreement was reached on the Trans-Pacific Partnership (TPP) trade deal: [pullquote] “The American Sugar Alliance still needs to review the final language and verify details in the Trans-Pacific Partnership, but we are cautiously optimistic about what we’ve learned from U.S. trade negotiators. …

The Power of Community

U.S. sugar production spans hundreds of communities in 22 states, supports 142,000 jobs, and pumps $20 billion a year into rural America.

At the American Sugar Alliance, we often cite big, national figures like these to drive home the importance of maintaining a strong sugar policy and supporting an important industry that helps feed the country.

10 Years After the Destruction

The news media recently made a huge deal about the 10-year anniversary of Hurricane Katrina. And rightfully so. The storm changed the country forever and demonstrated how Americans come together with compassion and humanity to help their fellow citizens in crisis. For the sugar industry, the 2005 hurricane season was likewise life changing. And it…

If At First Subsidies Don’t Succeed, Subsidize, Subsidize Again

India’s sugar industry has become the poster child for government handouts lately. But it keeps complaining no matter how much subsidy it receives.

When first confronted by domestic surpluses and global prices deflated by Brazilian and Thai subsidies, India’s government stepped in to ease the pain. In March, it announced $90 million in WTO-illegal export subsidies to help sugar producers offload their excess.

The Truth Hurts, Mate

Australia’s sugar industry and the Big Candy lobby are as thick as thieves these days, joining forces to harm U.S. farmers, take essential sugar markets away from American allies in poor countries, and undercut existing agreements with Mexico. Luckily, U.S. trade officials have shown tremendous resolve during Trans-Pacific Partnership talks to not undermine U.S. sugar…

U.S. Sugar Producers Excel in Another Measurement of Efficiency

Besides exposing Thailand’s $1.3 billion a year in sugar subsidies, Antoine Meriot also made another valuable observation in his recent study. It compared the efficiencies of sugar makers, noting, “Thai sugar producers are relatively inefficient compared with other major producers, such as leading exporter Brazil.” Specifically, Meriot used sugar recovery rates – a measurement of…

Big Candy’s Big Whopper About Taxpayer Cost

The Big Candy lobby and others who want to outsource U.S. sugar production and U.S. sugar jobs have publicly decried U.S. sugar policy because of its cost to taxpayers. Sugar critics base this talking point on a one-year anomaly. But is sugar policy really a drain on U.S. taxpayers? Not according to the U.S. Department of Agriculture, the Congressional Budget Office, or the Food and Agricultural Policy Research Institute – all of which agree that sugar policy will cost $0 over the life of the current farm bill.

Big Candy’s Big Whopper About Prices

The Big Candy lobby and others who want to outsource U.S. sugar production and U.S. sugar jobs have said that U.S. sugar policy harms consumers by keeping domestic prices higher than the rest of the world. Sugar critics base this talking point on the faulty assumption that cheap subsidized sugar from the “dump market” flows freely everywhere else in the world. But is foreign sugar really that cheap?

Sugar Producers Defend Free Markets on Chinese News Show

It’s not every day when the American affiliate of the predominant television broadcaster in Mainland China calls for an interview. And it’s even more rare when the topic the state-run network wants to discuss is how government intervention is wrecking global markets. But that is exactly what happened last week when Jack Roney of the American Sugar Alliance was invited to the set of CCTV America, the U.S. division of China Central Television News.