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. Here’s the short version:
Trying to keep pace with the recent massive run up in subsidization by Brazil, India announced in February an export subsidy and effectively entered into a subsidy arms race with its biggest competitor in the global sugar market.
Brazil complained and threatened a WTO challenge. It also increased its subsidies.
So India scaled back its export subsidy by 32% in May.
The Indian sugar lobby then complained about competing with a Brazilian sugar behemoth backed by more than $2.5 billion in subsidies a year.
So in June, India doubled down by reinstating the export subsidy AND erecting bigger trade hurdles to ensure no foreign sugar could enter its market AND boosting the mandate for sugarcane ethanol usage.
Is the cheapest major U.S. farm policy, costing taxpayers $0 from 2003 to 2012.
Enables America to be the world’s biggest importer, buying sugar from 40 countries including Brazil and India.
Supports 142,000 U.S. jobs and $20 billion in economic activity in 22 states.
Gives U.S. farmers a fighting chance as Mexico dumps subsidized sugar onto the domestic market and other countries’ subsidies wreck free trade
America’s sugar producers are more efficient than most global competitors and they can compete with anyone. But unilateral disarmament of U.S. policy while foreign treasuries are grossly distorting the global market is a non-starter. No wonder lawmakers have rejected Big Candy’s scheme eight times since 2012.
Instead, America should push for a global subsidy cease-fire so the best businesses, not the most subsidized, succeed.