Texas Tech Releases New Global Sugar Subsidy Guide

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

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

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

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

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

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

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

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

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

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

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

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.”