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.
Last week, the candy industry’s lobbying arm sent an email to select Hill offices informing lawmakers that not every state had sugar-related jobs.
Duh. That’s pretty obvious. Sugar can’t be grown in every state because of climate and soil conditions.
Each month, the USDA posts updated sugar pricing information on a website it has dryly titled “Sugar and Sweeteners Yearbook Tables.” The site itself is a bit of a labyrinth, with more than 60 tables tracking production, price, and consumption data. But if you know where to look, the site can be a wealth of information.
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…
Talk about wanting to have your cake and eat it too.
The month of June saw the National Confectioners Association (Big Candy) and its members brag to lawmakers about the growing economic might of its industry while simultaneously trying to convince Congress that no-cost U.S. sugar policy was leading to economic hardship.
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…
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.
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.
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.
New Texas A&M Study Details Importance of Current No-Cost Policy FOR IMMEDIATE RELEASE: May 17, 2016 CONTACT: Phillip Hayes, 202-507-8303 WASHINGTON – Current legislative proposals to change U.S. sugar policy may be positioned as modest reform, but they would have dire economic consequences on U.S. sugar producers, put U.S. taxpayers on the hook, and leave…
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.
It’s rare that a general business reporter with a national publication writes about the intricacies of the domestic sugar market. It’s even rarer that the resulting report is 100% spot on.
That happened this week at the Huffington Post. And instead of adding any of our own commentary, we’ll just repost their write up.
As we noted in a Sugar Beat post earlier this week, Big Candy and other producers of sugar-sweetened foods are outpacing others when it comes to economic success. Best of all, they are adding jobs – up 3% since 2009 – and expanding production right here in America.
As the appropriations season heats up, Big Candy lobbyists and other producers of sugar-containing products (SCP) are busy telling lawmakers that U.S. sugar policy is harming them financially and needs to be gutted.
Well, it turns out that’s not exactly true.
Dr. Alexander Triantis, the dean of the University of Maryland’s business school, released an in-depth study last week that detailed the economic strength of confectioners and other sugar-sweetened food producers.
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.”
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:
Jamaica is pretty good at growing sugar. They’ve been doing it since the 1600s, and sugar has largely fueled Jamaica’s economy ever since.
But that proud history could be coming to a bitter end, wrecked by global prices that have been grossly depressed by subsidies. Here’s how Jamaica’s sad sugar story has unfolded.
During a recent hearing to examine the health of the rural economy, House Agriculture Committee Chairman Mike Conaway (R-TX) noted that farm income has plummeted 56 percent since 2013. That, he said, represented the worst stretch since the depression of the ’30s. “In short, we have a very serious problem unfolding right now in rural…
Sugar subsidies are spinning out of control on the global stage and one country, ironically, has had enough. Mega-subsidizer Brazil said last week that it was filing an international trade case against Thailand for manipulating the world market with trade-distorting policies.
According to a Reuters article on the case:
It may be as nasty as ever out on the campaign trail, but here in Washington, things have been a little sweeter lately. That’s because dozens of sugarbeet and sugarcane farmers from across the country came calling on Congress last week. And dozens more will be in town this week to continue those meetings.
Though few outside of the Beltway pay much attention to the President’s budget every year, it is a noteworthy event inside Washington, DC.
In honor of Valentine’s Day, a couple of sugar policy critics penned a hateful article for the Wall Street Journal that spewed the same old erroneous talking points that have been used by Big Candy lobbyists and disproven for nearly three decades.
“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.
The Congressional Budget Office is charged with providing Congress budget estimates for all government policies. Sugar policy is no different, and critics often like to point to these estimates – especially in the out years – as a way to criticize sugar farmers’ safety net.
It might be a new year, but it’s the same old story.
Big Candy is complaining about no-cost sugar policy causing them financial hardship while they are simultaneously (albeit quietly) celebrating financial success. Consider these headlines from just the past couple of weeks:
U.S. Senator John Hoeven (R-N.D.) had some harsh words for the Organization of Petroleum Exporting Countries (OPEC) when he delivered the Republican Party’s weekly address on Jan. 9.
“Make no mistake, we are locked in a global battle to determine who will produce oil and gas in the world in the future,” he said. “Will it be OPEC? Russia? Countries like Venezuela? Or will it be us, the United States?”
‘Twas two weeks before Christmas, and in the U.S. House; Sugar policy critics were still busy running off at the mouth. Spreading lies about sugar price was their preferred tact; A not-so-jolly, bearded Norquist even got in on the act. They claimed Americans get burned as domestic prices soar; Ignoring the fact that the rest…
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.
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.
With all of the excitement of the past month in the world of agriculture – including a secret attack on crop insurance, sugar policy’s bizarre mention in a presidential debate, anti-farmer forces angling to reopen the farm bill, and Thanksgiving – some important foreign subsidy news almost went unnoticed. Almost.
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.
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.
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.
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:
| 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.”
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.
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.
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. …
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.
The American Sugar Alliance has been sounding the alarm bells over increased foreign sugar subsidization for years. Subsidies by big exporters like Brazil and Thailand have destroyed the global sugar market and have given rise to new sugar programs elsewhere.
In March of last year, Mars officially opened its new $270 million state-of-the-art factory in Topeka, Kansas. When christening the new home of Snickers and M&Ms, the company happily announced the addition of 200 local jobs and said the new plant would meet customer demand for 50 years.
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…
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.
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…
Luther Markwart, executive vice president of the American Sugarbeet Growers Association, was elected chairman of the American Sugar Alliance on Monday. And he wasted little time in jumping to the defense of all U.S. sugar producers.
By simultaneously rolling back sugar subsidies and trade-distorting policies in all countries – including America’s no-cost policy – the global price of sugar will naturally rise to reflect the cost of producing the crop.
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…
“We’re talking to all the parties, and sugar’s obviously a great sensitivity to our market here, and whatever we do in that area won’t undermine the sugar program.”
The Big Candy lobby and others who want to outsource U.S. sugar production and U.S. sugar jobs have criticized U.S. sugar policy for harming the “free market.”
Sugar critics base this talking point on people’s uninformed assumptions that the U.S. market is closed and that a global free market actually exists. But is American sugar really an impediment to free-market forces?
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.
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?
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 threatens food-manufacturing jobs. Sugar critics base this talking point on a decade-old paper that used old press reports as its source. But are candy jobs really disappearing?
Critics of U.S. sugar policy who claim U.S. sugar prices are excessive got a dose of reality today. Turns out world average retail sugar prices are 20 percent higher than prices in the United States, according to a new study by SIS International.
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.
What do you call an interest-free $940 million loan that likely will never have to be paid back?
Besides calling it one heck of a great deal, you could also call it a “subsidy.”
But in the case of some sugar mills in India, they call it “not enough.”
How was the Thai sugar industry able to achieve production gains while world sugar prices were falling?
It’s not often when confectioners openly admit the success of their industry. After all, doing so cuts against the tales they spin on Capitol Hill of sugar policy causing economic hardship. But as the American Sugar Alliance’s compilation of good candy news demonstrates, Big Candy’s business has been firing on all cylinders since the most…
Despite a collapse of global sugar prices, Thailand has been able to maintain high levels of sugar production thanks to at least $1.3 billion a year in subsidies and other policies – all of which has only exacerbated the glut of sugar currently distorting the world market.
For two years, U.S. sugar producers have pushed for a multilateral solution to the global sugar subsidies that have wrecked the global market.
Under this plan, known as the Zero-for-Zero sugar policy, sugar producers around the world would eliminate sugar subsidies and market-distorting policies so that a free market can form. And the World Trade Organization (WTO) is the logical venue for such reforms to be accomplished.
Earlier this month, a national farming television program called the U.S. Farm Report ran a segment that used decades-old talking points about U.S. sugar policy to completely mischaracterize U.S. producers’ stance on trade. Sugar beet farmers who saw the show were rightly furious and contacted the show’s producers to set the record straight.
“Cane is just like a hen that lays golden eggs… We are sure that arrears will be cleared with government help.”
One of Big Candy’s tired talking points against U.S. sugar policy is the fallacy that American food manufacturers are closing shop and heading to other countries because of U.S. sugar prices.
The Big Candy lobby and its congressional allies launched a surprise attack against U.S. sugar policy on April 22. And it used a highly unusual vehicle in its attempt to sabotage the recently passed farm bill: an African aid package.
An amendment offered by Pennsylvania Republican Sen. Patrick Toomey would have used the African Growth and Opportunity Act to flood the U.S. market with unneeded sugar imports.
The Senate Finance Committee rejected the scheme on a 10-16 vote, with the panel’s top Republican and Democrat – Sens. Orin Hatch (R-Utah) and Ron Wyden (D-Ore.) – both opposing the plan.
A subsidized bailout package worth approximately $320 million was just announced for India’s struggling sugar sector.
But before we dissect the details of the latest subsidy handout, let’s first revisit India’s other big subsidy announcements this year, which are helping destroy the world sugar market.
We don’t have the same sugar subsidies as Brazil, so we can’t sell you sugar below the cost of production. But, we can promise you sugar of the highest quality, produced by efficient Americans and delivered on schedule to your door at a fair price.
In February, the American Sugar Alliance unveiled a new online resource that tracks foreign sugar subsidies as part of its campaign for a free global sugar market. Since that time, the catalogue of media stories has been filled with news of an oversupplied world market where prices are far below average production costs. Fueling the…
It’s that time of year again. Birds are chirping, trees are budding, and bulbs are flowering.
Small children are excited about spring break, egg hunts, and decorated Easter baskets.
And Big Candy is busy complaining on Capitol Hill even though they are selling more product than ever – more than $2.2 billion worth of candy this Easter alone.
Last week, the National Farmers Union (NFU) convened its annual convention to set policy positions for the country’s second largest farm organization over the next 12 months. And part of that updated policy portfolio is continued support for America’s sugar farmers and the policy on which they depend.
There is little doubt that India’s ever-growing sugar export subsidies are a violation of World Trade Organization (WTO) rules. The new subsidies, detailed here by the USDA, have come under heavy scrutiny by other major sugar producers like Thailand.
The global sugar community chastised India when it announced export subsidies last year that seem to be in clear violation of WTO rules. Those subsidies, which were set at $53 a ton in February and increased to $54 a ton later in the year, helped the country offload 2.8 million tons onto the already depressed global market in 2014.
India responded to the international criticism by upping the subsidy to $64 a ton in 2015.
FOR IMMEDIATE RELEASE: March 3, 2015
CONTACT: Phillip Hayes, 202-507-8303
WASHINGTON-Congressman Ted Yoho (R-FL) reintroduced his Zero-for-Zero sugar policy, on Friday, which would instruct the administration to target the foreign sugar subsidies that are distorting world prices and keeping a free market from forming. Under the plan, U.S. sugar policy would also be rolled back in exchange for the elimination of foreign programs.
Members of the American Sugar Alliance (ASA) praised Yoho and the eight original co-sponsors of H.Con.Res. 20, and said sugar farmers from across the country are in town this week to educate lawmakers about the current U.S. policy and to encourage support for the resolution.
It was the subject of more than 40 congressional hearings and countless hours of careful debate. It was touted as a major bipartisan accomplishment of the 113th Congress. And the package will save taxpayers billions. Yet just one year after passage, and before many aspects of the 2014 Farm Bill have even been implemented, anti-agriculture…
FOR IMMEDIATE RELEASE: February 19, 2015
CONTACT: Phillip Hayes, 202-507-8303
WASHINGTON — U.S. sugar producers today unveiled a new resource on the American Sugar Alliance (ASA) website that catalogues increases to foreign sugar subsidies made over the past two years. The site, which provides links to news reports about international subsidy changes, already includes nearly 30 entries.
India’s sugar export subsidy is probably illegal under World Trade Organization rules, but that hasn’t stopped the country from – once again – making adjustments to it. And surprise, surprise, the adjustment will send the subsidy higher, not lower.
In late January, India’s food minister signed off on an export subsidy rate of 4,000 rupees ($64) per ton of raw sugar. That’s up from a subsidy of 3,300 ($53) rupees per ton, which was set in February of 2014 and then promptly increased to 3,371 ($54) rupees in August.
India exported 2.8 million tons of sugar last year with the aid of this subsidy, and this year, the Indian sugar lobby says it will need to offload about 2 million tons to keep domestic prices high.
It’s no big secret that big candy companies like to badmouth sugar farmers for being “protectionist.”
Even though America is the world’s biggest sugar importer, the market is never quite open enough for the candy man’s liking. Heavily subsidized sugar grown by less efficient foreign countries with substandard labor, environmental, and safety standards should flow freely through America, even if it bankrupts rural businesses and farms, they contend.
Heck, the confectioner lobby has even bashed sugar producers for asking that U.S. laws be enforced to stop Mexico from dumping subsidized sugar onto the U.S. market and harming U.S. sugar producers and taxpayers.
FOR IMMEDIATE RELEASE: February 9, 2015
CONTACT: Phillip Hayes, 202-507-8303
WASHINGTON—U.S. sugar policy is expected to cost taxpayers $0 from FY2015 to FY2025, according to projections released last week by the United States Department of Agriculture (USDA).
Sugar policy is the least expensive major commodity policy in the Farm Bill because farmers repay loans with interest instead of receiving subsidy checks. It ran at no cost to taxpayers from 2003 to 2012 and again in 2014.
There was a net cost of $259 million in 2013 when the USDA had to take emergency action to prevent the market from collapsing after Mexico dumped a record amount of subsidized sugar onto the U.S. market.
The American Sugar Alliance today sent all new Members of Congress a letter detailing the need for a strong sugar policy, the successful track record of the existing policy, and the importance of rejecting unilateral disarmament.
With a dominant 50% market share of global sugar exports, Brazil can exert more control over prices than any other sugar producer. Brazilian subsidies and policy decisions affect consumers and farmers around the world, who are helpless to combat a behemoth whose primary goal is to increase its monopolistic reign.
It’s why Brazil is called the OPEC of sugar, and it’s why we were not surprised to read about how even decisions in Brazil’s gasoline sector can move sugar prices.
The American Farm Bureau Federation recently completed its 2015 annual convention and with it the group’s 2015 policy positions. The nation’s largest farm organization continued its supportive stance of U.S. sugar policy. The Farm Bureau’s position on sugar reads: We support: (1) A program to protect the interests of domestic sugar producers and recommend that…
Louisiana sugar producers are fond of saying that their industry is older than the country itself. Formed when Jesuit priests first planted the crop in New Orleans in 1751, the industry has survived hurricanes, droughts, and even a Civil War to grow into an economic engine.
Sugar is woven into the fabric of the state’s heritage arguably as much any other crop anywhere else in the country and even has a college football bowl game named after it.
Unfortunately, a proud tradition doesn’t always equate financial success, which farmers in south Louisiana have found out the hard way in recent years. A flood of subsidized Mexican sugar was dumped onto the U.S. market sending prices spiraling, even as the price for things like equipment, seed, and fuel steadily rose.
World sugar prices are depressed and are likely to remain in the doldrums over the coming year as surpluses overhang the market. That’s according to a Dec. 24 report issued by Rabobank, one of the largest banks in the world and key lender to the U.S. food industry.
Rabobank pointed to the growing cycle of sugar cane, which is a semi-perennial crop that prevents producers from quickly downshifting production, as a factor in the continued oversupply.
Months after receiving preferential government loans, Indian sugar farmers soon will be allowed to walk away from their debts without repayment of either principal or interest, according to a Dec. 9 article by Bloomberg.
The outlet explained how some well-heeled agribusinesses are using the free money to expand at a time when the world sugar market is awash in a glut of subsidized surplus.
Things are going well for Mars, the maker of treats like M&Ms and Snickers. A recent profile on the company by the Wall Street Journal summed it up this way:
While many U.S. food companies are closing factories and cutting staff, Mars Inc. recently opened its first new chocolate factory in the country in 35 years to feed Americans’ seemingly boundless hunger for sweets.
The $270 million plant boasts two production lines that can produce 8 million miniature Snickers candy bars and 39 million peanut M&M’s every day. At one end of the line, a waterfall of milk chocolate covers hundreds of tiny Snickers bars each minute, infusing the air with the smell of candy. The factory’s 500,000 square feet, kept carefully at 68 degrees so the chocolate doesn’t melt, include space for another three production lines so Mars can expand.
The article offered a small peak inside of a company that is privately held and usually keeps financial information close to the chest.
Mars discloses little about its finances, except to say that its annual revenue last year topped $33 billion—about 50% higher than in 2007, thanks largely to the 2008 acquisition of Wrigley. Chocolate is Mars’s second-biggest business globally, after pet care.
According to the Wall Street Journal, Mars is battling Hershey for a bigger slice of the U.S. chocolate market, growing from 24% to 28% over the past year.
Earlier this week, a longtime anti-sugar critic penned an article in the Wall Street Journal attacking U.S. sugar farmers and the policy on which they depend.
Fortunately, the newspaper brought some balance to the debate by publishing the American Sugar Alliance’s response to the article today.
A Wall Street Journal article published in October detailed how the sugar subsidy race between Brazil, India, Thailand, and even China is now hurting poor farmers in Africa.
“For much of the past decade, African and foreign sugar companies have pumped billions of dollars into projects in an attempt to tap the sweet tooth of the continent’s new middle class. Today, mills in many countries are grappling with unsustainable stockpiles. The glut has forced companies to reduce output, put on hold new sugar projects and shutter mills.
“The culprit: cheap imports. African nations import about 5 million metric tons of sugar every year, from countries such as Brazil, China and India. The imports—generally heavily subsidized—are sold at prices lower than the cost of producing sugar locally, prompting African countries to shun sugar from their neighbors.”
We’ve spent a tremendous amount of time on these pages chronicling the massive run-up in sugar subsidies in Brazil and India. But one offender, Thailand, has largely gotten a pass…until now.
To better understand Thai sugar subsidies, it is important to first understand Thai sugar production.
All the little ghosts, goblins, and ghouls won’t have to worry about there being enough sugar to make their favorite Halloween treats this year.
That’s according to the U.S. Department of Agriculture, which recently reported that as of September 30, America’s sugar stocks-to-use ratio was 15.2%.
Grocers do not have easy jobs.
Keeping fresh food stocked in well-lit, clean, giant stores so that Americans can shop on a whim for everything from cumquats to canola oil on a 24-7 basis is daunting to say the least.
But it also has some perks for grocers, profits from sales of sugar being one of them.
If you’ve developed a wicked case of whiplash keeping track of all the news about Indian sugar subsidies, you’re not alone.
“It seems to be a good time to be a chocolatier,” a trade publication devoted to the candy industry recently reported.
In fact, according to the article, chocolate sales were up 24% from 2008 to 2013 and are expected to climb another 14% from 2014 to 2018.
World sugar prices are in the tank, production efficiency in foreign countries is falling, and the globe’s growing appetite for subsidization is partially to blame. Those were the key messages delivered at last month’s International Sweetener Symposium.
In years past, China’s subsidy of choice was a stockpiling program that helped manipulate domestic prices – not just in sugar but for other crops like cotton, too.
Reforms appear to be forthcoming.
Sugar is the world’s most distorted commodity market and increased government involvement is fueling inefficiency, according to a new video released today by the American Sugar Alliance (ASA).
U.S. sugar producers have filed new subsidy allegations in their countervailing duty case against Mexico’s sugar industry, including evidence that export subsidies are fueling a flood of Mexican sugar shipments and injuring U.S. sugar farmers and processors.
The U.S. Department of Agriculture reported in June an alarming fact about global sugar production. Apparently, most sugar producers outside of the United States are getting less and less efficient.
In its latest acreage report, USDA notes that acres of both sugarbeets and sugarcane are down this year – 1.7% and 3.5% respectively.
Since Mexico began flooding the U.S. market with dumped and subsidized product, U.S. prices have fallen, costing U.S. producers an estimated $1 billion on this crop alone. This depressed business environment is leading to contraction by efficient U.S. producers while inefficient Mexican producers seize more and more market share with the aid of unfair trade.
Her motto has been “Life isn’t a bowl of cherries – it is a bunch of raisins: raisin’ cane, raisin’ kids and raisin’ hope for a better tomorrow.”
India is second only to Brazil when it comes to producing sugar. And following all of the sugar subsidy announcements coming out of the country this year has been akin to watching a yo-yo.
Mexico had agreed to redirect shipments of subsidized sugar to other countries instead of the United States. But it is doing the exact opposite of what it promised. Mexico is actually accelerating exports of subsidized sugar to the U.S. and further injuring U.S. sugar producers.