There’s a clear resolve at American sugarbeet and cane producers’ Sweetener Symposium in Asheville, N.C., to keep their industry economically apart from the world sugar market.
Whether it’s economists, sugar producers or processors at the annual conference, they want no part of a dismal sugar market that’s been running 11-13 cents a pound the last couple of years. Jack Roney, lead economist and analyst for the American Sugar Alliance, points out those prices are about half an average world beet and cane sugar producer’s cost of making sugar.
Roney calls the world prices a “dump price” because countries that export sugar also subsidize it heavily, so they “overproduce and dump their surplus on the world market for whatever price it will bring.”
José Orive, executive director of the International Sugar Organization, took a similar view in remarks at the event.
“Sugar prices have hit rock bottom” and “India is the main reason,” he said, explaining how the Indian government is subsidizing cane farmers more each year even as the domestic price shrinks and production expands, adding to a world surplus.
Other countries are overproducing as well, Orive says, including the European Union, where “growers have embarked on a tremendous increase in production that has now proven to have a very, very negative impact on average prices.” Some EU countries continue to subsidize production even though their markets have also been opened since late 2017 to cheap sugar imports.
“Governments in many parts of the world are very firm about supporting their sugar producers,” Orive observes, “and the short answer is that government intervention will be there to stay.”
Meanwhile, the U.S. manages its sugar supply via import quotas to prevent domestic surpluses, and Patrick Chatenay, a British sugar industry consultant who is speaking at the event this week, says he “would certainly not recommend that the U.S. follow the same path as the EU” with its open borders approach.
“A free market gives you the lowest possible price,” Chatenay says, but it means “you’re transferring a lot of money from the farming community to the Coca-Colas, the Nestlés, the Unilevers,” and others who use sugar in foods and beverages.
What’s more, he says, if the U.S. “uses the same construction (as the EU) for a sugar policy, they’ll get the same result.” That result, he says, would be big government costs of subsidizing sugar producers, but also means “you’re allowing foreign treasuries … Brazil … Thailand … India … a free pass to invade your market” with cheap raw sugar.
American growers tend to agree. Chris Johnson, a Wahpeton, N.D., sugarbeet grower and Minn-Dak Farmers Cooperative member, says U.S. beet and cane crops spell thousands of rural jobs. Throwing the country’s sugar market open to cheap foreign suppliers, he says, means sugar and cane farming “goes to heck in a handbasket really quick” and that “would hurt the local economies, hurt communities.”
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