Abandoning U.S. Sugar Program would be Economic Suicide

(Chuck Muth) – To give you an idea of just how messed up India’s agricultural policies are, consider this item of bragging rights “enjoyed” by the sugar industry…

Cotton farmers are committing far more suicides than sugar mill owners.

Indeed, the sugar wars in the world’s #2 producer of the sweetener have been ugly in the past and getting uglier in the present.  Not only has the government’s subsidy policies totally fouled up the market between sugar farmers and sugar refiners, but farmers for other crops are hopping mad, too.

The government forces mills to pay farmers a price for sugar well above market price.  As such, there’s a glut of sugar being produced, which has further reduced the market price, which has resulted in new-and-improved government subsidies and support for sugar farmers and sugar exporters.

This hasn’t sat well with other struggling agricultural commodities.  State legislator Vijay Waddittewar asked in Congress this week, “Why should cotton growers in Vidarbha, which witnessed the highest number of suicides, get a raw deal.”

“Show us one case where a sugar mill owner or a cane cultivator has committed a suicide,” another member pointed out.  “Whereas the cotton belt is worst hit with hundreds of farmer suicides.”

Admittedly, many do not like the current U.S. sugar policy – which protects our domestic sugar industry from heavily-subsidized foreign competitors through a series of modest tariffs and import quotas – but the solution isn’t to unilaterally disarm and compete with markets so riddled with government intervention that even their own farmers are, literally, “buying the farm.”

Indian farmers are clearly addicted to government aid.  And Indian farmers vote.  So the generous subsidies the candy man is handing out aren’t going to end on their own.  It’s going to require both a little honey and a little vinegar from us.

Rep. Ted Yoho’s “zero for zero” resolution on this issue would open up the U.S. market to Indian sugar imports in exchange for Indian farmers weaning themselves from government price supports.  The same deal would be extended to other countries that also heavily subsidize their own sugar markets.

For the U.S. to abandon its current policies of protecting domestic producers without concurrent concessions by other global competitors would be our own version of agricultural economic suicide.