Congressman Vela: Diversity of Ag Committee Benefits Farmers Everywhere

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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.

EU Sugar Reform Transferring Billions from Farmers and Taxpayers to Food Processors

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After more than a decade of transition, Europe’s sugar policy reform is finally complete, and it is transferring $2.5 billion a year in wealth from farmers and EU taxpayers to food processors, with no discernible benefit to grocery shoppers.

That’s according to Patrick Chatenay, a European sugar market expert from the United Kingdom who spoke at today’s International Sweetener Symposium.

Some critics of America’s no-cost sugar policy point to the EU as a model for change, but Chatenay warns that there are valuable lessons to be considered from Europe’s experience.

“Domestic and foreign subsidies destroy competitive industries,” he said, “Europe is still wrestling with the effects of both and these subsidies are distorting Europe’s market.”

Even after reform, European sugar farmers are still receiving nearly $700 million a year in subsidies to keep production up, and that is fueling some inefficiency, according to Chatenay. He explained that most of these subsidies are going to producers in the least efficient areas, while the most efficient producers are receiving no sugar-specific help and are going out of business.

Meanwhile, Europe is now exposed to the artificially-low sugar prices found on the heavily subsidized world market. Subsidies in Brazil, India, Thailand and elsewhere have generated a glut of surplus sugar that has pushed prices well below average production costs.

That’s imperiling even Europe’s efficient sugar businesses and farms without lowering overall food costs in the region. Plummeting sugar prices are being absorbed by industrial buyers, such as candy and snack companies, without being passed along to EU consumers, Chatenay said.

Europe was forced to overhaul its sugar policies after the World Trade Organization found its use of export subsidies and other programs to be in violation of international trade rules. And the rocky road that Europe experienced transitioning to a liberalized market is also an important consideration, Chatenay told the audience.

“Eighty-three sugar mills were closed, some 150,000 farms gave up growing sugarbeets, and tens of thousands sugar-related jobs were lost with the initial reform,” he said. “The latest reform will increase these losses because of the resulting low-price environment.”

Chatenay’s presentation mirrored a study he published in June about the effects of Europe’s changes.

U.S. sugar producers receive loans that are repaid with interest when their sugar is sold, rather than EU-style direct subsidy payments, and are wary of repeating Europe’s mistakes. They have endorsed a strategy known as the Zero-for-Zero sugar policy, which looks to simultaneously reform subsidies globally instead of unilateral disarmament.

N.C. Congressman Urges Agriculture to Speak Proudly with One Voice

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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.”

U.S. Sugar Producers Recognize Retiring Roberts, Conaway

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America’s farmers and ranchers were blessed during the last Farm Bill debate to be represented by Congressional leaders who worked well together and were determined to pass a farm bill on time and get it signed into law.

Sens. Pat Roberts (R-KS) and Debbie Stabenow (D-MI) and Reps. Collin Peterson (D-MN) and Mike Conaway (R-TX) were emblematic of how much Congress can achieve when people come together for a common cause.

Last week, Conaway announced that he will not seek reelection in 2020, joining Roberts, who announced earlier this year that he would retire in 2020.

“America’s sugar producers owe these two men a debt of gratitude,” Ryan Weston, chairman of the American Sugar Alliance, said this week at the industry’s annual convention. “We’ve faced tremendous challenges in recent years – from low prices to bad weather and rampant foreign subsidization – but thanks to our champions on Capitol Hill, we survived and continued to thrive.”

Both Roberts and Conaway have addressed the sugar industry at past conventions, Weston explained, saying, “we always knew that these two would put American farmers first, because that’s exactly what they have always done throughout their careers.”

Conaway, who addressed the International Sweetener Symposium in 2016 and 2017, was clearly a vocal supporter of America’s no-cost sugar policy.

“Sugar policy, for me, is easy to defend,” he explained to a roomful of sugar farmers who traveled to Idaho for the convention three years ago. “It works…it works for the American taxpayer, and more importantly it works for the American sugar producer.”

Roberts addressed the International Sweetener Symposium in 2015, telling farmers that he had “no intention of reopening and re-debating the farm bill,” thus preserving U.S. sugar policy.

Weston wished both Roberts and Conaway a happy retirement from Congress and said the industry is eager to work with Members who take on their leadership roles with the Senate and House Agriculture Committees in the next Congress.

“Our challenges aren’t going away,” he concluded. “Times are very tough in rural America right now and we look forward to continuing to work closely with Senator Stabenow and Congressman Peterson along with the next generation of Republican Committee leaders.”

Congressman Richard Hudson Proud to Support America’s Sugar Farmers

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“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.”

Farm Returns Below 2% for Fifth Straight Year as Rural Economy Slumps

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The average rate of return for U.S. farmers is 1.3 percent this year, marking the fifth straight year of returns below 2 percent, Dr. John Newton, the chief economist for the American Farm Bureau Federation (AFBF), said today at the International Sweetener Symposium.

That translates to a negative median farm income of -$1,449 this year, forcing most producers to depend on a growing amount of off-farm income to make ends meet. Returns this low create challenges for agriculture – from keeping pace with rising input costs to repaying operating loans – and the impact ripples throughout the rural economy, he said.

“Commercial debt in agriculture is at record highs, loan delinquency rates are rising, and Chapter 12 bankruptcies have increased sharply,” Newton told the group. “Some major lenders are reducing their exposure to agricultural loans and reducing lending volumes.”

Brian Cavey, senior vice president of government affairs for CoBank, said his bank continues to be a major agricultural lender, with 100 percent of its business focused on farm credit, agribusiness lending, and rural infrastructure.  But he agreed that current tailwinds in the rural economy are troubling.

“Right now, the name of the game is managing risk and uncertainty,” Cavey said.

This kind of environment necessitates strong farm policies to give lenders confidence that loans will be repaid in a timely manner. Protecting crop insurance and opposing cuts to the farm safety net are top priorities for CoBank, he explained.

The company was one of the biggest champions of America’s no-cost sugar policy during the recent Farm Bill debate for that reason.

The National Farmers Union, like the AFBF, was another vocal supporter of sugar policy and its president, Roger Johnson, explained that keeping sugar policy strong will be key to weathering the current storm.

“Farmers are facing an uncertain future, and they need some long-term predictability,” Johnson concluded. “With continued low commodity prices and the impacts that current trade disputes are having on rural America, the real question that we need to be asking ourselves is how to strengthen farm policy even more.”

Glenn Thompson Outlines His Top Priorities for Ag Committee

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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.

World Sugar Prices Hit Rock Bottom, Poised for Recovery

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The world sugar market, which has been battered by low prices, may soon get a reprieve, according to the head of the International Sugar Organization.

Jose Orive, the group’s executive director, addressed the International Sweetener Symposium today and said, “World sugar prices have hit bottom, and signs are pointing to a recovery.”

That’s good news for global farmers who have been struggling with prices as low as 12 cents per pound – well below the average cost of producing sugar. To survive falling prices, many foreign governments have increased subsidies, which has only increased overproduction.

“The world is still suffering from high accumulated stocks that will need to be absorbed by the market before we can see any improvement on price,” Orive explained. But he is optimistic because production from big sugar suppliers appears to be declining, which will let stocks fall.

Brazil, the world’s biggest exporter, has seen production fall rapidly since 2017/18.  Production by the second biggest exporter, Thailand, is also down as farmers switched to alternative crops. Europe, another major producer and exporter, has also devoted fewer acres to beet production this year.

However, Orive warned that there are factors that could quickly change the outlook.

“Weather could provoke production variations, while consumption growth is declining as the war against sugar continues,” he said. “Government policies will continue, mainly for political reasons.”

India, now the world’s biggest sugar producer, is a prime example of the rapid impact policy changes can have on the market.

There, farmers are guaranteed prices for their crops and these price guarantees have continued to climb despite downward market signals. These cane prices combined with export quotas and subsidies are all being challenged in the World Trade Organization for violating international rules.

“The global sugar market is the most distorted commodity market in the world because of subsidies,” noted Jack Roney, a U.S. sugar industry official who moderated the panel. “Today’s low prices are a result of these subsidies, and any bullish signals can be quickly undone by government intervention.”

Roney said the extreme volatility of the world market is the reason America has a sugar policy, and he urged governments around the world to put an end to competing subsidies.

“U.S. farmers are highly efficient, and we want to operate in a free market, but that cannot happen until all countries set aside their subsidies and let a real market form,” he concluded.

India Doubles Down on Trade-Distorting Export Subsidies

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Stop us if you’ve heard this one before.

India has a massive sugar problem. It will have 17-million-metric-tons more sugar than what it consumes this year, according to a recent USDA report. USDA notes the 17 million tons is more than double India’s minimum annual stock requirements. And India’s sugar mills are finding it difficult to sell this surplus sugar at a profit.

Seemingly undeterred by three separate challenges at the World Trade Organization regarding its use of an array of market-distorting subsidies, India is considering utilizing more export subsidies in an effort to reduce sugar stocks and settle outstanding payments to cane farmers.

Bloomberg reports:

India plans to bolster efforts to boost sugar exports and help beleaguered mills in defiance of criticism from Brazil and Australia that its existing subsidies are keeping global prices low and hurting their farmers. The government may reimburse exporters some ocean freight and marketing expenses, according to people familiar with the proposal, who asked not to be identified as it isn’t public.

These new payments are an unwelcome addition to India’s already long list of trade-distorting practices – including the use of cane subsidies and subsidized and preferential loans – that have encouraged overproduction and contributed to depressed prices on the global sugar market. They have created a problem in their domestic market and by dumping sugar below the cost of production on the world market created problems that threaten sugar producers world-wide.

As one opinion writer recently emphasized in the Indian newspaper, The Hindu Business Line, “this situation is entirely [India’s] own making:”

In a bid to please the sugarcane farmers, an important vote bank in States such as Maharashtra and Uttar Pradesh (UP), successive governments have announced [a] high cane price. Over the years this has resulted in a huge mismatch between the prices of sugarcane and other crops. Today, sugarcane fetches 60 per cent higher returns than any other competing crop. Assured of both price and market, farmers prefer sugarcane even if they periodically face significant delay in receiving payment.

Sugar surplus is bad for everyone. It depresses the prices apart from affecting the cash flow of the mills. They struggle to pay the farmers and as arrears mount the government is forced to step in and help the mills clear the dues through relief packages.

The bitter truth is that doubling down on export subsidies will only continue to drive distortions in the global sugar market. Prohibiting direct and indirect export subsidies must be the first step to fixing the most distorted and volatile commodity market in the world.

That’s why the U.S. sugar industry support’s Congressman Ted Yoho’s Zero-for-Zero sugar policy, which eliminates all global subsidies and allows America’s efficient sugar producers to compete on a level playing field. Only with a Zero-for-Zero sugar policy will a true free market have an opportunity to thrive.

European Union Serves as Warning to US Sugar Policy Critics

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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.”

New USDA Report Outlines India’s Sugar Subsidies

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India’s latest export subsidy scheme blatantly flouts international trade rules, and it’s been receiving lots of attention lately.

Australia, Brazil, and Guatemala have all recently initiated formal proceedings against India under the World Trade Organization’s (WTO) dispute settlement mechanism. Leaders from Alvean, the world’s biggest sugar trader, singled out Indian subsidies for suppressing global prices. And earlier this month, Texas Tech University released a global sugar subsidy handbook that dedicated considerable space to India’s trade-distorting policies.

“India, a long-time sugar importer, is now making an unprecedented move to supplant Brazil as the world’s dominant supplier,” the Texas Tech study’s author noted in a recent column. “Through export subsidies that appear to be WTO-illegal, soft loans, tariffs, and other new policies, India increased production and more than made up for Brazil’s [production] decline.”

Now, the U.S. Department of Agriculture has provided updated insights into India’s extensive array of support programs.  Its recently-released annual report about India’s sugar industry outlined several of the country’s subsidies. Among them:

  • Financial aid to sugar mills – $566 million
  • Subsidies to boost exports – $191 million (with approval to grow to $768 million)
  • Costs to run a buffer stock/export program – $171 million
  • Subsidies to cover interest payments on loans – $400 million

And that doesn’t even count the $1.5 billion in preferential loans that the report mentioned, which are designed to help India’s industry cope with low prices amid surpluses. Nor does it include India’s ethanol program, which the USDA report says may benefit from proposed aid to improve production capacity.

India also guarantees high prices for sugarcane to boost farm revenue, making it more profitable than other crops and helping to fuel oversupplies.

With such an intricate web of subsidies one would think India’s industry would be flush right now. Wrong. Even with a generous subsidy system, the inefficient sugar industry is struggling. As the USDA observed:

Currently, sugar sold in international markets is selling at more than 33 percent discount to Indian sugar (wholesale), a gap which widened by 9 percent in the last seven months, driven in part by Indian rupee appreciation of 6 percent (relative to USD). Subsidies and supports have not made Indian sugar competitive on international markets.

And don’t expect the price situation to improve in the short term. The USDA report predicts that surplus stocks will reach a record 17 million metric tons in 2019 – that’s about 6 million tons more than the United States consumes in a year.

Clearly, India’s system is broken. It’s time for reform. It’s time for all countries to eliminate the subsidies wrecking the global sugar market. It’s time for a Zero-for-Zero sugar policy that prioritizes business smarts over subsidies.

Texas Tech Releases New Global Sugar Subsidy Guide

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U.S. trade negotiators and lawmakers gained access to a helpful resource about foreign agricultural policy today when Texas Tech University unveiled a report on global sugar subsidies.

The study – authored by Dr. Darren Hudson, director of the school’s International Center for Agricultural Competitiveness – included profiles of 22 foreign countries that account for 80 percent of global sugar production and 83 percent of exports.

He examined major market players like Brazil, India, and Thailand, as well as those with which America is currently engaged in trade talks, including China, Japan, Mexico, Canada, and the European Union.

“There’s one common thread connecting every country,” Hudson said. “They all subsidize their own country’s sugar production to the detriment of others.”

This, he explained, has made sugar one of the world’s most distorted commodity markets. And to protect their domestic sugar industries from the associated price volatility, countries are creating more and more subsidies, which is adding to the oversupply and depressing prices further.

“Government intervention in the world sugar market remains extreme and widespread with a wide variety measures to support domestic sugar producers,” read the report.

Tariffs were a commonality among all countries in the Texas Tech report, with some in excess of 100 percent. Domestic price supports, debt forgiveness, and handouts for inputs such as fertilizer and equipment were also widespread. Ethanol programs that subsidize the use of sugar as a feedstock act as a price support and are gaining in popularity, the report found.

Brazil has long been the world’s biggest sugar producer, riding an estimated $2.5 billion in annual subsidies to a dominate share of the global market. But their dominance is being challenged by India, which has dramatically increased government support and exports in recent years.

An export subsidy, supply controls, tariffs, and soft loans were among the new Indian policies the report identified. India, whose supports are estimated at more than $1.7 billion a year, is currently being challenged by several countires at the World Trade Organization for excessive subsidization.

The United States is not included in the report. U.S. sugar policy – a combination of import quotas and loans repaid with interest – operates without taxpayer cost and exists as a response to foreign subsidies.

The U.S. sugar industry has publicly endorsed a concept introduced by Congressman Ted Yoho (R-FL), known as the Zero-for-Zero sugar policy, which would end America’s no-cost policy in exchange for other countries eliminating their trade-distorting programs and letting a true free market form.

Sugar Farmers Featured on New Farm Policy Facts Podcast

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Farm Policy Facts debuted a new podcast called Groundwork yesterday, and two sugar farmers were the first guests on the show.

John Snyder, of Wyoming, and Travis Medine, of Louisiana, discussed the importance of sugar farming in rural communities with Groundwork host Tom Sell.

The show runs about 18 minutes. You can find it on farmpolicyfacts.org as well as the iTunes store. Groundwork is a monthly series focusing on range of policy issues that are important to American farmers.

The first episode tackled the importance of the Farm Bill and the impact sugar has on the nation’s economy.

Snyder, on the show, noted that sugarbeets and sugarcane support 142,000 jobs in 22 states. He said the global sugar market is heavily subsidized, which necessitates America’s no-cost sugar policy in the Farm Bill. And that policy helps keep people employed in communities where jobs are often scarce.

“It trickles down to the people who work for us on the farms, it trickles down the [businesses] here in town, to the people who do our repairs,” he said. “It’s a huge part of our economy.”

Snyder was one of dozens of sugar farmers recently in Washington, DC, to thank lawmakers for delivering such a strong sugar policy in the 2018 Farm Bill. Sugarcane farmer Travis Medine was also part of that trip to the nation’s capital.

During the podcast, where he discussed the trip, Medine also explained the unusually long return-on-investment in sugarcane. Most people, he said, don’t know that cane is harvested for four years on an initial planting. It’s such an extended timeline that business planning is difficult without the stability provided by the sugar policy in the Farm Bill.

“A lot of people don’t understand that’s a very, very long-term investment,” he said. “It is labor intensive and costly, we have to know that safety net is there.”

Listen to Groundwork for more from Snyder and Medine. Follow the podcast on twitter at #Groundwork.

Volatile Sugar Market Necessitates Strong Sugar Policy

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As 2018 came to a close, the USDA published a report about the global sugar market. It noted that the world’s dominant sugar producer (and subsidizer) Brazil was decreasing production because of “unfavorable weather and more sugarcane being diverted towards ethanol,” where prices are stronger.

The 8-million-ton drop in Brazilian production should have been a big market mover, but it wasn’t. Current sugar prices on the world dump market are lower than when the report was published, according to USDA data.

Why? Because the world sugar market is highly unpredictable. It is a dumping ground for subsidized surplus sugar that’s sold well below the global cost of production.

The report went on to note: “Global stocks are forecast to rise to a new high of 53 million metric tons” because of a massive stock building in another major subsidizer, India.

The intense market manipulation by foreign governments makes sugar unlike any other commodity.

Dan Colacicco, a PhD and former USDA sugar policy expert for 20 years, explained this unique dynamic in a presentation to the International Sugarbeet Institute last month.

“International sugar trade grew up in the Mercantile period and has a long history of government intervention,” he told the group. “This widespread intervention by foreign governments makes the price particularly volatile.”

Colacicco, who is a current advisor to the U.S. sugar industry, drove home this point by showing price volatility percentages for several commodities on the world market.  Sugar ranked the highest with a more than 9% volatility factor, whereas staples like corn, wheat, and milk were all under 5%.

Complicating factors in the sugar market, he said, is the fact that “sugar supply is insensitive to price.” Sugarcane, which accounts for about 80% of global sugar production, is a multi-year crop that is hard to exit quickly, and sugar is tough to store until prices improve.

That means surpluses can continue to flood the market even during low-price periods, driving prices even lower.

This reality can punish sugar producers, he said, since “sugar price and producer revenue are very sensitive to supply changes.”

Colacicco demonstrated this by showing the effect of a 10% supply increase on various sectors.

A 10% uptick in supply would sink sugar prices by nearly 30% and producer revenue by more than 26%. For comparison, a similar supply uptick would only affect beef prices by 13% and producer revenue by 12%.

The level of foreign subsidization, mixed with market volatility, and sensitivity to supply change explains why America needs such a strong sugar policy, he noted.

“Without America’s no-cost sugar policy, our farmers and factories would have a hard time surviving in this kind of environment. American food manufacturers and consumers who depend on high quality and sustainable sugar production would also be losers,” Colacicco concluded. “Congress recognized that and should be commended for delivering during the Farm Bill debate.”

Don’t Let Critics Fool You, Sugar Policy Costs $0

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Today might be April Fool’s Day, but it’s no joke that federal sugar policy once again cost taxpayers $0 last year.

Even better, the USDA predicts sugar policy will continue to operate at zero cost for the next 10 years.

That means that federal sugar policy cost taxpayers absolutely nothing in 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2014, 2015, 2016, 2017 and 2018. This is by design, as our sugar policy is based on loans that must be repaid with interest. Not subsidy checks handed out to sugar farmers and producers, as some critics might mislead people into believing.

Only once in the past 15 years has sugar policy incurred a government cost. Mexico violated our trade law in 2013 and dumped subsidized sugar, requiring the USDA to take action to keep the domestic sugar market from collapsing.

But don’t just take our word on the positive benefits of our federal sugar policy.

Congress reaffirmed the importance of a strong sugar policy with the passage of a bipartisan Farm Bill in December 2018. And sugar farmers recently visited Capitol Hill to thank lawmakers and continue to share the importance of sugar policy to both urban and rural communities across the country.

Not to mention, federal sugar policy ensures that manufacturers and consumers alike have access to an affordable supply of high-quality American sugar. U.S. food manufacturers pay 25% less for sugar than companies in other developed countries, and U.S. grocery shoppers pay 22% less than the rest of the developed world.

That means keeping a strong sugar policy in place benefits taxpayers, consumers and our sugar producers. All for $0.

Don’t let anyone fool you – U.S. sugar policy remains a no-cost success story.

Sugar’s Sweet Story – Farmers Share Importance of Sugar with Congress

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During the sugar beet harvest, production runs 24 hours a day on Kevin Etzler’s farm in Minnesota. It’s far from an easy job, but sugar farmers take immense pride in providing an affordable and high-quality homegrown product.

But because virtually every one of the 120 foreign countries that produce sugar subsidize their industry in some way, depressing global prices, American sugar farmers rely on our strong federal sugar policy to survive.

“With so many new members of Congress who will be influencing agricultural and trade policy over the next two years, it is important to share with them first-hand the challenges that farmers are facing,” Kevin explains.

So, Kevin took his message directly to Capitol Hill.

Cane and beet farmers spent the last two weeks meeting with hundreds of lawmakers in Washington, DC, sharing their personal stories and thanking them for passing a Farm Bill that protects a strong sugar policy.

For Pete DuFresne, a sugarcane farmer from Louisiana, it is important that Congress understand that a vibrant sugar industry means economic opportunities for communities across America.

“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,” Pete says.

The economic security that America’s sugar policy provides comes at zero cost to taxpayers because farmers receive loans they must repay with interest, not subsidy checks.

“Capital is the biggest hurdle to entry in farming – especially today when farm incomes are low.  Lenders will not extend loans to young growers, who lack the equity of our older peers, unless there is confidence of repayment,” Louisiana farmer Travis Medine says. “With our lenders, that confidence comes from the no-cost sugar policy found in the Farm Bill.”

John Snyder from Wyoming emphasizes that U.S. sugar policy has been essential to his survival against unfair foreign competitors. “We need policy, a good solid sugar policy” he says, “You know, we just want a fair shake.”

“We can compete with anybody, but I can’t compete against the Brazilian treasury, or the treasury of India, or Mexico when they were dumping subsidized sugar in our market and the government was paying their growers down there huge amounts of money to do that,” John explains.

Tim Deal from North Dakota agrees: “We cannot take on foreign treasuries and foreign governments and have them dump sugar into the United States. It will bankrupt us.”

Protecting a no-cost program that ensures a sustainable supply of sugar and supports 142,000 American jobs is a no-brainer. Thank you to the sugar farmers who recently made their voices heard by taking to the halls of Congress and educating lawmakers about the importance of U.S. sugar policy.

Learn more about America’s sugar farmers and workers by visiting the Faces of Sugar Policy.

A Strong Sugar Policy Supports American Jobs

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Fifty-seven sugar factories have closed since the 1980s due to low prices, contributing to the loss of 100,000 sugar jobs. In fact, the Labor Department’s Bureau of Labor Statistics stopped tracking “sugar manufacturing” as a job category in 2008 due to the industry’s shrinking size.

Thankfully, there are still 142,000 hardworking men and women employed by sugar across 22 states. And the salaries and benefits associated with those sugar jobs pump more than $4.2 billion a year into both rural and urban communities where job opportunities might otherwise be limited, and generate nearly $20 billion in total economic activity each year.

Protecting sugar jobs – many of which are union jobs – and maintaining a strong U.S. sugar policy is the primary message being delivered by dozens of sugarbeet and sugarcane farmers this week on Capitol Hill.

Similar messages were shared by sugar workers across the country as part of theFaces of Sugar Policy campaign:

“It would be hard for me to imagine what this community would be like without sugar. The number of jobs that people would no longer have.”
– Tracy Bentley, Scottsbluff, Nebraska

 “These kinds of jobs are very important to Baltimore and middle-income families. I recommend keeping it going because you want to keep the middle class, the middle class.”
– John Godleski, Baltimore, Maryland

“People stay here. They retire here… I think it means a lot for the community and the company itself, too. It’s a really nice partnership between the company and the community.”
– Walter Aucaylle, Yonkers, New York

The American sugar industry is working hard to maintain high-paying jobs in the United States. We are thankful that Congress recognized the economic importance of our homegrown sugar industry and overwhelmingly supported passage of a strong sugar policy in the 2018 Farm Bill.

The bottom line: supporting our successful sugar policy means protecting good American jobs and the communities that rely on them. That’s something worth fighting for.

Why Is Sugar Policy Important? Just Ask a Sugar Producer

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Sugar farmers from coast to coast are in Washington, DC, this week and next to meet with hundreds of lawmakers and thank them for delivering a strong sugar policy in the recently-passed Farm Bill.

For most of the farmers, it’s their first trip back to the Capitol since the Farm Bill was approved, and given the bill’s overwhelming support, there will be many members to thank. There will also be a lot of new members to educate about the importance of maintaining the no-cost sugar policy in the face of a struggling rural economy.

So, what will be the main messages communicated? Look no further than sugar farmers’ and workers’ own words, as quoted on the materials they’ll be handing out.

“Farmers own most of the country’s sugar companies. We’ve literally bet the farm that our businesses will succeed, so we are always striving to improve.”

-Dan Younggren, Hallock, Minnesota
Sugarbeet Farmer

“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. 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.”

-Pete DuFresne, Paulina, Louisiana
Sugarcane Farmer

“The Domino Sugar Yonkers refinery has operated continuously in this community since 1938. The refinery is a source of pride that contributes millions to the local economy and provides good-paying jobs.”

-Matt Shue, Yonkers, New York
Refinery Manager

“It’s getting harder to make a living in sugar. Production costs keep going up, but sugar prices have barely budged in decades. Hawaii recently stopped growing sugar because of this economic squeeze, and I fear Texas won’t be far behind if U.S. sugar policy is weakened.”

-Leonard Simmons, San Benito, Texas
Sugarcane Farmer

“If sugar is not profitable, farmers lose more than our farms. We lose our businesses, our investments, and our local communities. A strong no-cost sugar policy supports our families and our communities.”

-Galen Lee, New Plymouth, Idaho
Sugarbeet Farmer

“We need the security the Farm Bill offers to keep my family growing for another generation. If my kids choose to farm, I want there to be a business for them to continue that opportunity.”

-Rita Herford, Minden City, Michigan
Sugarbeet Farmer

            If there’s no sugar policy, we have “no land, no future, no job, no home.”

-Cornelius Fowler
IAM Florida Sugar Workers Union

Couldn’t have said it better ourselves.

2018: Candy Manufacturers’ Expansions and Big News

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From record product launches to multimillion-dollar expansions, what a sweet year it was for candy manufacturers.

As consumers’ demand for candy products continues to surge, America’s confectioners are gladly taking advantage of this growing market. And America’s 142,000 sugar farmers and workers are thankful to be a part of their success story.

Ferrero USA saw wild success in 2018 with more than 90 million Kinder Eggs sold in the United States. The president and CEO of Ferrero described this growth as “more dramatic than expected,” necessitating a 67,000-square-foot expansion in New Jersey.

Confectionary powerhouse Mars Wrigley also announced multiple investment projects across the country.

Mars Wrigley broke ground in February on a $30 million, 65,000-square-foot expansion at a plant in Waco, Texas that produces Snickers, Skittles, and Starbursts. A spokesman credited this expansion to the growing popularity of these candy products, saying that “the brands produced in Waco have seen fantastic growth.”

In October, Mars Wrigley announced they would be spending $142 million to invest in personnel and upgrade manufacturing capabilities in Cleveland, Ohio in order to support a brand new product: Hazelnut Spread M&M’s.

And October brought more cheers than scares for Hershey’s when the candy company announced that they expected to hit their first-ever $600 million Halloween season.

These record profits would not be possible without the hard-working men and women who produce America’s sugar under some of the highest labor and environmental standards in the world, setting the gold standard for sustainable sugar production.

And a vibrant U.S. sugar industry would not be possible without a no-cost sugar policy that levels the playing field against market-depressing foreign subsidies.

With all the expansion projects and economic growth, it makes you wonder why Big Candy companies are still complaining about a sugar policy that’s widely supported by Congress.

Here’s hoping that 2019 is as successful as last year for confectioners – and here’s hoping that success extends throughout their entire domestic supply chain.

Big and Small Subsidies in Last Week’s News

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The global sugar market remains in turmoil, plagued for years by a subsidy-fueled oversupply. And as foreign sugar businesses struggle to stay afloat, governments around the globe are taking action.

Unfortunately for the market, the action being taken by most governments is to increase subsidies, which further depresses prices. Last week saw two governments – both big and small – intervene.

First for the big news.

India is rapidly expanding sugar production and exports thanks to government market interference. There, government officials have been steadily building upon a $1.7 billion-a-year subsidy system to bolster an inefficient industry.

The most recent announcement came last week as India’s government increased the selling price of sugar in a bid to help mills and farmers who are struggling with surpluses.

The irony of the government mandating a price hike to counter a government-driven oversupply was not lost on Tim Worstall, a columnist for the Continental Telegraph, an online European publication.

“We’ve an industry in oversupply. They’re making too much of the damn stuff. So, to deal with this we’re going to raise the minimum price? But, but, won’t that increase supply, reduce demand, making that oversupply even worse? Well, yes, it will, but you know election year politics….

“Yes, it’s election time, that’s why the Indian government has just raised the price of sugar. So, the money will flow through to the cane farmers who have lots and lots of lovely votes. And that’s it, that’s all there is to it. However stupid it is to raise the price of something already in oversupply.”

It wasn’t just a sugar superpower making news last week, either. Sugar oversupplies and rock-bottom prices are hitting small producers as well. Earlier this month, Kenya announced a direct subsidy of $27 million to sugarcane farmers to help them through this rough patch.

Unfortunately for Kenya’s producers, $27 million won’t even make a dent in the real issue that’s placing them at a disadvantage. Fixing the global subsidy problem and bringing about a fair market that gives all countries a chance to succeed is what’s needed.

That’s exactly what the Zero-for-Zero sugar policy, introduced by Congressman Ted Yoho (R-FL) in late January, aims to do. It would target foreign subsidies that are wrecking the global market and would roll back America’s no-cost sugar policy once a free market takes shape.

Yoho calls it a subsidy cease fire, and it’s the most refreshing piece of sugar policy news to come out of a government body in some time.

Yoho and his supporters rightly realize that sugar producers and consumers alike will win when we get government out of the global sugar business and let countries compete in terms of efficiency instead of subsidization.

2018: A Year of Subsidies

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Congressman Ted Yoho (R-FL) recently reintroduced his zero-for-zero sugar policy resolution that targets sugar subsidies around the world. As he’s explained before:

Sugar is widely considered the world’s most distorted commodity market. Global sugar prices have fluctuated more than 200 percent since 2008 alone and often fall well below the cost of producing sugar. Why? Because of the actions of a few government-dependent producers….

Congress must look for smart ways to get governments out of private business. That’s why I’ve proposed a legislative solution called the zero-for-zero sugar policy, which has been gaining traction among free marketers and has been hailed as a model for all of U.S. farm policy.

It calls on the elimination of U.S. sugar policy in exchange for the elimination of the foreign subsidies and unfair trading practices that are distorting the global market. It would reward the world’s most efficient producers rather than the most coddled. And it is 100 percent consistent with the smart modernization of U.S. trade policy championed by our new Administration and endorsed by the electorate.

The need for this legislation has never been greater. Subsidized sugar surpluses are stacking up around the globe. Prices on the world sugar market are tanking and today don’t even cover half the average cost of producing sugar.

And foreign governments are doubling down on their subsidies. Consider these recent events that cropped up in 2018:

  • To alleviate the pressure of a subsidy-fueled surplus, the Indian government last year mandated that 5 million metric tons of sugar be exported and sweetened the deal in September by announcing transportation subsidies to offset the cost of bringing sugar to port. Meanwhile, sugar mill owners are asking India to raise the government-set selling price of sugar in order to artificially raise the value of their stockpiles. This is all in addition to the $1.7 billion a year in government handouts already flowing to the industry.
  • Brazil launched a WTO case against India to protect its dominance as a global sugar exporter. Of course, Brazil’s thriving sugar industry would not exist without decades of government intervention and subsidies to the tune of $2.5 billion a year. 
  • Aided by government subsidies estimated at $1.3 billion annually, Thailand has nearly doubled its production over the past ten years, 75% of which was exported into the world market in 2017/18.
  • Much like India, Pakistan also hoped to control their domestic surplus last year by flooding the world market with cheap government-subsidized sugar. By incentivizing exports through $194 million worth of subsidies, the Pakistani government only served to further destabilize the world sugar market.

Enough is enough. It’s time to get foreign governments out of the sugar business, and Yoho’s sugar policy is the right recipe. That’s why the American Sugar Alliance, and the 142,000 U.S. farmers and workers it supports, is urging lawmakers to co-sponsor this common-sense solution.

Sugar Producers Praise Reintroduction of Zero-for-Zero Legislation

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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).

Top U.S. Trade Negotiator Joins American Sugar Alliance Staff

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A trade negotiator with more than three decades of experience, including a key role in negotiating the Trans-Pacific Partnership Agreement, has joined the American Sugar Alliance as an in-house consultant.

Brian Grunenfelder will work alongside veteran ASA Trade Adviser Don Phillips in helping analyze the complex global trade issues that impact U.S. sugar farmers and shape America’s no-cost sugar policy.

Grunenfelder recently served as the Deputy Assistant U.S. Trade Representative in the Office of Agricultural Affairs. In this capacity, he led the U.S.-Japan Trans-Pacific Partnership Agricultural Market Access Group and managed agricultural negotiations with the Republic of Korea, Colombia, and Peru. 

Grunenfelder previously spent more than 25 years within the Foreign Agricultural Service at the U.S. Department of Agriculture.

“We warmly welcome Brian and are thrilled that he has brought his vast experience in agriculture and trade policy to the American Sugar Alliance,” said Ryan Weston, ASA chairman.

“America’s sugar farmers are increasingly under threat from unfair foreign subsidies and malicious trade practices,” Weston said. “Brian has the expertise to navigate these varied international challenges and will be an invaluable asset in shaping sugar policy here at home.”

Don Phillips, who will work with Grunenfelder to ensure a smooth transition, plans to continue with ASA in a more limited role, primarily focused on serving on the Agricultural Technical Advisory Committee for Trade in Sweeteners and Sweetener Products at the U.S. Department of Agriculture.

“Don has been a champion for this industry,” Weston added. “He’s guided us through numerous trade negotiations and conflicts, and he’s always done so with class, professionalism, and tremendous leadership. On behalf of 142,000 U.S. sugar farmers and workers, thank you, Don.”