Farm Policy Fact: “We Need the U.S. Sugar Policy”

(Chuck Muth) – American Agriculturist published an excellent “Farm Policy Facts” commentary this week pointing out that “As long as countries like India continue to oppose free markets, U.S. farmers will need a safety net.”

The op-ed notes that President Donald Trump has labeled India “the tariff king,” noting that it “charges tariffs of 100%.”  The president rightly declared “that’s not free trade.”

The commentary went on to specifically address the Indian problem as it relates to sugar…

“India is also set to become the world’s largest sugar producer, and Brazil and Australia are teaming to file a formal complaint with the WTO, according to Reuters.  The nations say any move by India to subsidize exports of its growing sugar stockpile is a threat to world price recovery.

“India has used domestic subsidies to encourage farmers to grow more acres of sugarcane. It recorded a record crop during the last harvest and observers expect another record crop this year. India this year planned to spend $231 million to subsidize payments from mills to sugarcane farmers, according to Bloomberg.

“Mills in India have been struggling with a slump in local prices following the record crop. The government has mandated that mills meet export quotas even if prices are lower than the cost of production.  India’s output is expected to climb to a record 31.5 million tons this year, Bloomberg reported.

“India’s expansion in sugar comes as world market sugar prices are at their lowest level in a decade, hovering around 10-11 cents, noted Jack Roney, Director of Economics and Policy Analysis at the American Sugar Alliance. That price is barely half the world average cost of producing sugar.

“’India shields its sugar producers from the vagaries of the volatile and often depressed world market,’ he said. ‘Indian sugar producers are not responding to world market signals. They are responding to government decisions on domestic sugar pricing and credit programs.’

“Roney noted that export subsidies are illegal under WTO rules, though India doesn’t seem to care.  ‘We are pleased to hear that two other big sugar exporters, Brazil and Australia, are contemplating a formal WTO complaint against India,’ he said.

“India’s subsidy spending on sugar makes it hard for nations like the United States to compete. American farmers, he said, are among the most efficient in the world, but can’t go up against foreign governments with nearly-unlimited funds to subsidize production.

“The Sugar Alliance, which represents the U.S. sugar growing industry, supports the ‘zero-for-zero’ resolution that was introduced in Congress.  It would eliminate U.S. sugar policy, which historically cost taxpayers nothing, if other nations drop their subsidies.  ‘Until then, we need the U.S. sugar policy as a buffer to foreign-government dumping on the world market,’ he said.”

What he said.