COEUR D’ALENE, Idaho, Aug. 1, 2016 – The American Sugar Alliance’s (ASA’s) annual Sweetener Symposium got off to a rousing start Monday morning with a strong show of support for U.S. sugar policy from two lawmakers who will play crucial roles in forging the next farm bill.
Speaking by video, House Agriculture Committee Chairman Mike Conaway said it’s easy for him to “defend” U.S. sugar policy, which includes price supports, import quotas and domestic market allotments to influence the amount of sugar available to the U.S. market.
The Texas Republican said the sugar policy is needed because of foreign subsidization and predatory dumping, where nations export excess sugar at below their cost of production.
“It works,” he said of the current U.S. sugar policy, which is designed to be at no-cost to taxpayers. “It works for the American taxpayer, and more importantly it works for the American sugar producer.” He told the hundreds of U.S. producers at the gathering that he looks forward to working with them during development of the next farm bill.
Conaway was followed by Michigan’s Debbie Stabenow, the ranking Democrat on the Senate Ag panel, who also spoke by video. Stabenow noted that the $20 billion U.S. sugar industry is an “essential part of the rural economy,” supporting 140,000 jobs, many in her home state, a major sugarbeet producer.
“We don’t have an economy or a middle class, for that matter, if we don’t make things or grow things. And that’s what each of you do,” Stabenow said. “America’s great sugar industry is an essential part of the rural economy and our nation’s agricultural economy.”
Stabenow stressed that the annual economic activity and the jobs generated by sugar producers make it a worthwhile investment on Capitol Hill. And she outlined her agenda when it comes to future sugar issues:
“It’s important that we again find a path forward with the Mexican government on (sugar) trade. It’s important that we keep the farm bill intact and free from attacks designed to undermine the five-year sugar policy and beyond. And it’s important that we are ensuring that the interests of U.S. sugar (producers) are represented in the larger trade agenda. I am laser-focused on all of those things.”
Backing up ASA’s argument that other major sugar-producing countries excessively support production, the group released a new study today that details how India props up its inefficient sugar industry with an estimated $1.7 billion in annual subsidies.
ASA, which commissioned the study, notes that the author, Antoine Meriot of Sugar Expertise LLC, corresponded with Indian officials to better understand how the world’s second-biggest sugar producer structures its “intricate web of subsidies and policies.”
Meriot argues that government-mandated sugarcane prices are at the heart of India’s subsidy system. These prices, which are paid to farmers by the sugar mills that process the cane, are much higher than elsewhere.
For example, India’s farmers received $42 per metric ton of cane in 2014, compared to the $31 seen by U.S. farmers, Meriot says in the report. These artificially high prices equated to an almost $1.6 billion subsidy in 2014 and $1.125 billion in 2015, according to Meriot, compared with the market-oriented approach favored by Indian sugar policy reformers.
To help offset inflated prices, the government gives sugar mills soft loans, which “have provided interest forgiveness for a total amount of about $440 million over the last nine years,” Meriot writes.
Additional supports identified by Meriot include: $62 million in export subsidies in the past two years; $134 million from 2007 to 2015 to build and maintain buffer stocks; $173 million budgeted this year to help reduce surpluses; import duties at 40 percent; and $831 million in interest-free loans since 2008 to modernize mills, fund research, and support energy production from sugar.
India’s massive handouts have kept inefficient producers in business, encouraged overproduction, and helped distort global prices, the report argues.
“The Indian sugar policy generates a vicious cycle of expenditures but the [government] will not hesitate to intervene and support its industry if necessary, even if it involves costly subsidies and controversial export support,” Meriot concludes.
In the past, the Sugar Alliance has commissioned studies on that show other major sugar producers, including Brazil and Thailand, support sugar production with subsidies worth billions of dollars.
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