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From the International Sweetener Symposium:
STOWE, Vt.—The idea that there is global free trade in sugar is a “mirage,” according to Patrick Chatenay, a sugar and ethanol expert from the UK-based company ProSunergy, because “subsidies are rampant and unequal.” Further, he said, “Currency fluctuations make a mockery of tariff trade concessions and can damage competitive sugar producers.”
Chatenay, who addressed the 31st International Sweetener Symposium today, added, “The sugar market is notorious for permanent and pervasive domestic and trade special treatment, such as state ownership, tariffs, government mandated prices, soft loans, and preferential tax treatment.”
The “glut of support systems,” Chatenay explained, has created an international dump market in which global sugar prices don’t cover global average production costs.
Worldwide production costs have averaged 50 percent higher than prices for the past 25 years. There was a short period where prices rose above production costs from 2009 to 2012, but prices came crashing back down in 2013 after high prices and new subsidies served as a catalyst for production increases and worldwide surpluses.
Subsidization is particularly prevalent among the world’s biggest exporters. Brazil, Thailand, India, and Mexico account for 70 percent of global exports and subsidy rates in those countries have been rising, he said.
Among the most egregious policies singled out by Chatenay: increased preferential loans coupled with debt forgiveness in Brazil; government mandated transition from rice to sugar production in Thailand; Indian export subsidies and price supports; and government ownership by Mexico.
Chatenay applauded the U.S. sugar industry’s push for a zero-for-zero sugar policy that would lead to the elimination of all subsidies and trade manipulating policies. However, he noted, such a policy will take a long time to accomplish given the long history of government involvement in sugar, the current lack of progress in multilateral free trade talks, and the need to control currency fluctuations.
“Major foreign producers have grown reliant on subsidies and will be reluctant to promote free trade,” he said.