Unstable Crop Market behind Skyrocketing Food Costs

(Chuck Muth) – While candy-makers have steadily increased the price of their products in recent years, the reality is that food prices across the board are surging…and it has nothing whatsoever to do with the nation’s sugar policy.

A recent Wall Street Journal story notes that rising food prices at the grocery store are the result of rising food prices for a variety of “food staples from coffee to meat to vegetables,” with forecasters predicting for 2014 the largest jump in retail food prices in three years.  Interestingly, the price of sugar in the United States is down considerably — it’s been cut in half since late 2011 and is back down to the lows of the 1980s.

According to the WSJ, “much of the rise in the food cost comes from higher meat and dairy prices, due in part to tight cattle supplies after years of drought in states such as Texas and California and rising milk demand from fast-growing Asian countries.”

So what’s that have to do with the price of tea in China or sugar in Brazil?  This…

Brazil is the world’s largest sugar producer, having captured over half of the global market, and as it goes, so too goes global sugar prices.  That’s bad news for consumers since Brazil is also suffering from a serious drought at a time when demand for sugar in emerging nations is growing by leaps and bounds.

True, there is presently a global glut of sugar in the world market.  However, adverse weather conditions out of the control of any nation’s government could quickly shift the market from feast to famine.  And that’s reason enough to be concerned with any change in U.S. sugar policy that would decimate the domestic sugar market and leave American families to the mercy of developing nations.

If the current U.S. sugar policy was eliminated today, we’d be flooded with cheap, government-subsidized sugar imports from other nations which could well drive domestic sugar farmers out of business.

And while in the short run that would likely result in modestly lower sugar prices, what will happen when unforeseen and uncontrollable circumstances slam sugar producers in other countries and there’s no longer a domestic U.S. sugar industry to fall back on?  Prices for kitchen-top groceries will shoot through the roof.

In an ideal world, the U.S. would eliminate its sugar program in response to other nations simultaneously eliminating their government subsidies so that U.S. sugar farmers would be able to compete in a true free market rather than be put out of business by artificially cheap imports.

That’d be good for U.S. farmers. That’d be good for U.S. consumers.  And that’d be good for U.S. national security.  History has shown that unilateral disarmament has never worked…and never will.