Zero for Zero the Solution to Global Sugar Subsidies

(Rick Manning) – The two largest sugar producers, Brazil and India each heavily subsidize sugar production and dump the excess produced to drive down the world sugar price and eliminate sugar industries around the world.

To show just how dominant Brazil and India are, the two countries combine to produce about 17 percent more sugar than the total produced by the next eight largest sugar producing nations in the world. Just as Saudi Arabia is the market maker in the world of oil, Brazil and India are the market makers in sugar.

And they exploit this subsidy driven dominance by controlling the world sugar price through the massive supply they dump onto the world market. Their goal is to increase their market share in countries like the United States and in doing so, driving the currently robust U.S. sugar industry into the history books. And if not for the supports in the current system, they would have in a large way have succeeded, putting American consumers at the whim of an international market that is notoriously volatile.

So what can be done to create a semblance of free markets for the sugar industry with the goal of using it as a model for the rest of agriculture?

U.S. Representatives Kat Cammack (R-Fla.) and Dale Kildee (D-Mich.) have introduced bi-partisan legislation which serves as a good starting point. Known as Zero for Zero, the Cammack-Kildee proposal urges the President to pursue trade policies which would result in the “elimination of all direct and indirect subsidies benefiting the production or export of sugar” by countries who subsidize sugar production at a proscribed level.

The resolution goes on to urge the president to present sugar policy reform legislation once the ending of these major subsidies is certified.

While some may worry that this approach is too tepid, and would take years to accomplish, the truth is that the seventy-to-eighty-year frontal assault on ending agriculture subsidies have failed time and again. Zero for Zero puts a focus on the President’s ability to jawbone other nations into limiting or ending their sugar supports, allowing the United States to end or dramatically limit ours.

No approach is perfect, but the Cammack-Kildee bill provides a credible pathway to creating agriculture trade agreements which keep the American farmer on a level international playing field while ending the pernicious effects of government subsidized agriculture.

When faced with a level international market, no one can out-produce the American farmer, with the reciprocal Zero for Zero approach, the entire agricultural subsidization can be overhauled and hopefully eliminated. Without it, it is likely we will face another seventy years of grinding our teeth in disgust at a corporate welfare system as conservatives flail in futility at the agricultural subsidy windmills that always defeat us.

Mr. Manning is the president of Americans for Limited Government