Former USDA Chief Economist: Sugar Policy Supports Farmers, Food Security

U.S. sugar producers keep America reliably stocked with affordable sugar, thanks to the stability provided by U.S. sugar policy, said Dr. Rob Johansson, Director of Economics and Policy Analysis at the American Sugar Alliance (ASA), in remarks at today’s Agricultural Outlook Forum, hosted by the U.S. Department of Agriculture (USDA).

Johansson, who served at USDA for 21 years, including most recently a six-year post as USDA’s Chief Economist, spoke to the pressures facing farmers and emphasized that sugar producers are not immune to these challenges.

Rising prices for fertilizer, feed, labor, fuel, pesticides, and transportation have put the squeeze on farmers, tightening their already thin margins. Fertilizer prices, in particular, have risen significantly this past year, with some individual fertilizer components posting triple digit increases. Increased costs of production are one reason why the UDSA has forecasted a 4.5% drop in net farm income for 2022, when compared to last year.  And when accounting for inflation, net farm income is forecast to fall by nearly 8% compared to last year.

“With inflation affecting most sectors of the economy this year as well as continued declines in government assistance for pandemic relief, we can expect farmers to be concerned about their bottom-line heading into the 2022/23 crop year,” Johansson said before giving his presentation.

While input costs continue to rise, sugar prices have generally fallen in real terms when accounting for inflation, despite being an essential ingredient in many foods.

“Refined sugar prices have fallen by 35 percent in real terms over the past 40 years,” Johansson said.

U.S. sugar policy has allowed America’s sugar producers to invest in on-farm and factory improvements to become even more efficient and more sustainable. Per acre yields for sugarbeet and sugarcane have both sharply increased over the past 20 years, with the industry overall producing 16 percent more sugar on 11 percent less land.

Still, America’s sugar producers and our American-made supply of sugar are under threat from both growing economic pressures and efforts to undermine America’s successful sugar policy.

Johansson underscored the importance of maintaining a strong sugar policy as Congress begins deliberating the 2023 Farm Bill. U.S. sugar policy protects family farms and good American jobs, and rural and urban communities, while supporting our national food security by providing a stable supply chain, all at no cost to taxpayers.

“Another benefit of U.S. sugar policy is the development of resilient supply chains for America’s sugar supplies,” Johansson said. “We have seen throughout the pandemic how our sugar companies were able to quickly redirect sugar supplies to where they were needed. Maintaining our current program that allows our farmers to harvest, refine, and store sugar until it is needed is a key component of that resilient supply chain.”