Pot Calling the Kettle ‘Protectionist’

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.

USDA: Sugar Policy to Cost $0 for Next Decade

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.

OPEC of Sugar Lives Up to its Name

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.

Farm Bureau Continues Sugar Policy Support

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…

Sugar and Candy, Making La. Sweet for Centuries

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.

Global Sugar Market to Stay Sour; Global Subsidies Rise

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.

India Adds Loan Forgiveness to Its Growing List of Subsidies

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.

Mars Profile a Must Read

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.

Sugar Subsidy Escalation Harms Africa

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.”

Sugar = Pure Profit for Grocers

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.

Damage Caused by Subsidized Mexican Sugar Comes in Focus

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.

Eight Going on Nine

We wanted to take a moment to thank the 32 members of the Appropriations Committee who stood with America’s sugar farmers. In particular, we wanted to spotlight the four appropriators who made impassioned speeches against Big Candy’s power grab.

A History Lesson Not Worth Reliving

In case you’ve forgotten, May marks the 72nd anniversary of sugar rationing in this country. Sugar was the first crop rationed in 1942, and it was the last commodity removed from the rationing list five years later. Back then, America didn’t have a nationwide domestic sugar industry and the Western States relied on shipments from the Philippines and Hawaii. But the Japanese conquered the Philippines and ships in Hawaii normally used to ship sugar were needed for the war effort.

The Big Dump Could Get Bigger

Here are a few attention grabbers about the record amount of subsidized sugar Mexico dumped onto the U.S. market last year.

  • Mexico sent an all-time high 2.1 million tons of sugar to America in FY2013.  For perspective, that’s enough to supply every person in the U.S. with 13 pounds of sugar.
  • This was up from 1.1 million tons the year earlier and marked a doubling of Mexico’s share of the U.S. market from 9% to 18%.
  • The resulting price decline—U.S. prices have fallen 50% since the end of 2011—will cost U.S. producers $1 billion this year.
  • The USDA was forced to spend $278 million in taxpayer money to keep the market from collapsing under the weight of Mexico’s dumped sugar.
  • Mexico’s government, which owns and operates 20% of the Mexican sugar industry, is the country’s biggest producer and exporter of sugar.

The fact that an inefficient industry largely controlled by the government strengthened its foothold in America at the expense of U.S. farmers and U.S. taxpayers is alarming.  But apparently, it’s just the beginning.

New USDA data show that Mexico is dumping sugar at an even faster pace this year than last.  In fact, the 1.3 million tons that has arrived in the first seven months of FY2014 is 48% higher than over the same period the year prior.

Do as I Say, Not as I Do

It has been about one week since the U.S. Department of Commerce (DOC) launched a formal investigation into the unfair trading practices of Mexico’s sugar industry, noting strong evidence of significant dumping and actionable subsidies. Yet, a group of lobbyists from the candy, corn refining, and Mexican sugar industries are angling to influence what is…

DOC Initiates Investigation Into Mexican Sugar Subsidies, Dumping

The U.S. Department of Commerce (DOC) today announced that it would initiate an investigation to determine if the Mexican government has subsidized Mexico’s sugar production and whether that sugar is being dumped into the U.S. market. A group of U.S. sugar producers filed antidumping and countervailing duty petitions against Mexico’s sugar industry on March 28, and they applauded DOC’s decision. “It is clear that the petitions have merit in the eyes of the U.S. government,” said Phillip Hayes, a spokesperson for the American Sugar Alliance. “Considering what’s currently happening in the market, we are hopeful that corrective action will be taken as soon as possible.”

U.S. Sugar Producers File Antidumping, Subsidy Cases Against Mexico

America’s sugar producers today asked the United States government to take corrective action against Mexico’s sugar industry for dumping subsidized sugar onto the U.S. market and inflicting harm on U.S. growers and taxpayers.

The antidumping and countervailing duty petitions filed with the U.S. International Trade Commission and U.S. Department of Commerce allege that the Mexican industry has shipped sugar to the United States at dumping margins of 45 percent or more and has received substantial subsidies from Mexican federal and state governments.

Big Candy’s Big News Finds a Home Online

For years, it’s been difficult for lawmakers to learn about confectioners’ economic success.  That’s because candy lobbyists are too busy telling Congress that sugar policy has caused them financial harm. Now Capitol Hill has a place to go for Big Candy’s Big News.  The American Sugar Alliance released a new website this week that will keep track of…

National Farmers Union Backs Sugar Policy

Earlier this year, Congress overwhelmingly agreed to extend U.S. sugar policy for another five years. Strong support for sugar policy by leaders in the agricultural community certainly helped make that decision easier for lawmakers.

And don’t look for that support to wane anytime soon. Just last week, the National Farmers Union held its annual conference and adopted its policy positions for the upcoming year. When it comes to sugar policy, NFU reaffirmed its support:

State of the Candy Industry is Strong

This week, the National Confectioners Association (NCA) is hosting its annual State of the Industry Conference at the Fontainebleau Resort in Miami Based on the news pushed out by NCA recently, conference attendees will likely hear that the state of the candy industry is strong.  Ironically, they’ll also probably hear from industry lobbyists that sugar…

U.S. Sugar Producers Set Sights on Foreign Subsidies

With a strong five-year sugar policy at their side, U.S. sugar producers are now setting their sights on addressing the foreign sugar subsidies that make U.S. sugar policy necessary. That’s according to Jack Roney, director of economics and policy analysis for the American Sugar Alliance (ASA), who spoke today at the USDA Agricultural Outlook Forum. “U.S. sugar producers are among the most efficient in the world, and we would thrive in a global free market, if one existed,” he explained. “But historically, sugar has been and continues to be the world’s most distorted commodity market because of foreign subsidization. Something must be done about it.”

Be My Valentine

This Friday is Valentine’s Day, and chances are good that Big Candy lobbyists will use the holiday as an excuse to bash U.S. sugar policy on Capitol Hill. They will claim that current sugar policy has harmed them financially, which is why Congress should outsource domestic production to heavily subsidized foreign producers. But these same…

New Five-Year Sugar Policy Becomes Law

President Barack Obama today officially signed the 2014 Farm Bill, and with it, continued America’s current sugar policy for another five years. Sugar producers applauded the new law, which overcame tremendous obstacles to ultimately unite leaders from both political parties.

The sugar industry also noted its appreciation for the signing ceremony being held in Michigan, which is home to Senate Agriculture Committee Chairwoman Debbie Stabenow (D)…

China Subsidizes Sugar Growers

In the world of cotton, China is well known for its massive government-run stockpiling program. This program, one aim of which is to keep prices inflated for Chinese growers, has led to uncertainty in the world market, and is compounded by other subsidies to its cotton farmers. Seems China’s sugar sector is pursuing similar policies.…

Big Candy Profits Impress

The curtain has officially closed on 2013, and by any definition, it was a sensational year for America’s candy makers. Sales were up. Profits were high. And companies announced numerous expansion projects. Now based on new data by Yahoo!Finance, we realize just how profitable things have been. Confectioners check in at an amazing 12.3% profit…

Farm Bureau Backs Sugar Policy

The American Farm Bureau Federation, the nation’s largest agricultural trade group, is holding its annual convention this week where members will discuss policy priorities. The Farm Bureau has been a strong supporter of U.S. sugar policy over the years and was instrumental in beating back recent policy attacks by big candy companies that sought to…

India Steps Up Subsidy Scheme

U.S. sugar producers have publicly backed a “zero-for-zero” sugar policy, which would promote an end to global sugar subsidies in favor of a free market. Meanwhile, foreign sugar producers have been busy ratcheting up their subsidies and artificially manipulating global prices. The latest example comes from India, the world’s second biggest sugar producer and third…