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Apples-to-Apples, Zero-for-Zero: Getting Sugar Policy Right

(June 6, 2013) – On Thursday, the Club for Growth urged opposition in the Senate to the Agriculture Reform, Food and Jobs Act (S 954), maintaining the bill spends too much and reforms too little.

CFG rightly calls for true reform which will “eventually eliminate federal agricultural subsidies.” On that, we agree whole-heartedly.

We also think it important to note that the U.S. sugar industry, unlike other agricultural industries, has received no taxpayer-funded subsidies under the current farm bill.

That said, at the same time the U.S. farm program has grown, so has Brazilian subsidies of its sugar industry, resulting in an unlevel playing field for domestic sugar producers vs. Brazilian imports.

Indeed, Reuters reported just this week that “Agricultural powerhouse Brazil increased its farm budget for 2013/14 by nearly a fifth.”

And as Patrick Chatenay of UK’s ProSunergy revealed last month, Brazil’s sugar industry today “benefits from at least $2.5 billion (US) per year of direct and indirect government incentives.”

As such, while the U.S. sugar industry has once again declined support for taxpayer-funded subsidies in the current farm bill, it nevertheless urges Congress to maintain the existing program of tariffs which level the playing field with subsidized foreign sugar imports.

In meantime, Congress should pursue true reform by embracing what is being referred to as a “zero-for-zero” policy in which U.S. tariffs on imported sugar would be dropped in return for exporting countries dropping their sugar industry subsidies.

We believe such a free market strategy for sugar is the correct one, and the best way for Congress to protect this critical domestic agricultural commodity.