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.