From the 35th International Sweetener Symposium:
Prices continue to fall on the world sugar market as overproduction, fueled by government subsidies, further depresses what has long been considered to be the world’s most distorted commodity market.
More than 20 million metric tons of sugar is now overhanging the market, according to Ben Fessler, a market analyst with C. Czarnikow Sugar, who presented to more than 400 sugar industry representatives yesterday at the 35th annual International Sweetener Symposium. For perspective, that’s nearly twice as much as all Americans consume in a year.
This surplus is largely driven by production expansions in India and Thailand, he said. And production in both markets is expected to grow throughout 2019.
India and Thailand are known to be among the biggest subsidizers, with past estimates valuing government intervention at $1.7 billion $1.3 billion a year, respectively.
Europe also added to the global glut with production levels at 20-year highs, Fessler noted. Europe recently rewrote its sugar policy and is now providing farmers with subsidies to help insulate them from downward pricing pressure.
Dan Colacicco, a former U.S. Department of Agriculture (USDA) official who now consults for the U.S. sugar industry, says that falling global prices and growing foreign subsidies put U.S. producers at a disadvantage.
“The distorted nature of the world market and the seemingly endless streak of foreign handouts is exactly why our country has a sugar policy,” explained Colacicco, who moderated the panel. “Without this policy in place, we’d be outsourcing production of a key food ingredient and rewarding other countries’ bad acts.”
And that sugar policy, which operates without taxpayer cost, will be needed as surplus levels appear to be growing here at home, too.
Frank Jenkins, president of JSG Commodities and a well-known North American market analyst, told the group the domestic sugar surplus ratio could exceed 18 percent this year because of excessive imports. That is far higher than what the USDA considers a balanced market.
Congress is working to renew a Farm Bill that expires on Sept. 30. U.S. sugar policy is included in that pending bill.