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All Aboard the Sugar Subsidy Train!

(Chuck Muth, President, Citizen Outreach) – The global lockdowns spurred by the spread of COVID-19 has hit sugar consumption.  In response, some foreign governments are doing what they do best: resorting to government subsidies.

In recognizing “the plight of the sugar industry” and providing “much needed relief,” the Indian government is preparing to “increase the sugar export quota” and provide an additional subsidy for “up to a maximum of 6 million tonnes.”

Ram Vilas Paswan, Consumer Affairs Minister, told Zee Business “that the sugar sector should not be allowed to fall.”

“The government will be giving the farmers cash through the sugar mills,” Chetan Bhutani reported last week.  “Major chunk of the relief package will go to the sugar mills.”  In addition, the government “is considering an increase in the minimum selling price of sugar.”

The government of Georgia, meanwhile, is supporting its sugar industry in a number of ways, including railway transportation and natural gas at reduced costs.

“Local production needs more support based on the fact that the scale of the global market is greater and cost is much lower,” declared the Minister of Economy and Sustainable Development.  “Of course, in order for local products, including local sugar, to remain competitive, support is needed.”

And over in Thailand, the world’s second-largest sugar exporter, the government has approved $319 million in subsidies to its sugarcane farmers who have been hit by drought.  Reuters reports that “around 300,000 sugarcane farmers would receive the financial aid.”

“The government sympathizes with sugarcane farmers,” said Ratchada Thanadirek, a deputy government spokeswoman.

Although the drought has now eased, Thailand’s “cane production next season is expected to further decline by around 20%…as the coronavirus pandemic hits the global economy and reduces demand for sugar.”

Once again…

The reason for the U.S. sugar program of import quotas and tariffs is to level the playing field for American farmers forced to compete against international sugar producers that enjoy an unfair market advantage due to foreign government subsidies.  Until the global market becomes a true free market free of government subsidies, the U.S. sugar program should remain in place.