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  • Sugar producers applaud recent comments by USTR Katherine Tai

    Sugar producers applaud recent comments by USTR Katherine Tai

    (Chabella Guzman | KNEB.com) – Newly confirmed U.S. Trade Representative Katherine Tai recently signaled strong support for America’s sugar producers and affirmed her commitment to America’s no-cost sugar policy, sending cheers throughout sugar country.

    In written comments submitted to the Senate Finance Committee following her confirmation hearing, Tai responded to inquiries from several senators asking how she would handle trade issues pertaining to sugar, considering the heavily subsidized nature of the global sugar market.

    “Any reforms I pursue regarding the global sugar market will be consistent with maintaining the current no-cost U.S. sugar policy,” Tai stated in response to a question from Senator John Barrasso (R-WY) asking how she would approach reforming the distorted global market.

    In response to a follow-up question from Senator Barrasso about how to utilize the World Trade Organization (WTO) to secure a multilateral approach to sugar reform, Tai stated that updates to the WTO rules would be needed to effectively target foreign subsidization.

    “WTO rules need to be updated to reflect long-standing agricultural issues that have not been rectified under the WTO’s current construction. I will work with like-minded partners to ensure that any new rules are consistent with U.S. domestic sugar goals,” Tai wrote.

    Senator Bill Cassidy (R-LA) asked Tai about Brazil’s recent attempts to trade increased access to its market for certain commodities in exchange for allowing Brazil to send more subsidized sugar to our shores. Tai firmly stated that under her watch, she will not tolerate other nations trying to pit American agriculture against itself.

    “In my testimony, I emphasized that no U.S. stakeholder should be prioritized over another during trade negotiations,” Tai said. “If confirmed, I commit to ensuring that no new agricultural market access comes at the expense of other agricultural stakeholders.”

    These comments are bad news for mega-subsidizer Brazil, which benefits from direct and indirect subsidies valued at an estimated $2.5 billion per year to prop up its sugar industry – and who has long hoped to flood our market with its subsidized sugar. In fact, widespread production- and trade-distorting foreign subsidies, including from top offenders Brazil, India, and Thailand, have led to rampant overproduction and sugar prices below the costs of production.

    Tai also stated that “U.S. trade policy must benefit domestic agricultural producers and provide consumers and food manufacturers with a safe and secure domestic food supply. I will make this a central pillar of any agricultural trade policy I pursue.”

    Tai’s commitment to supporting domestic agricultural producers and assurance that sugar access won’t be unilaterally traded away in future trade negotiations is welcome news for America’s sugar farmers and workers.

  • Myth-Buster: Sugar Policy Misconception Debunked

    Myth-Buster: Sugar Policy Misconception Debunked

    By Chuck Muth, President, Citizen Outreach

    In a Valentine’s Day column, Ross Marchand of the Taxpayers Protection Alliance claimed sugar farmers in America receive government subsidies.

    This is a myth.  “Fake news.”

    Last week, Tom Doran of AgriNews interviewed Bart Fischer, Agricultural and Food Policy Center co-director at Texas A&M, on a webcast hosted by Farm Policy Facts, “a coalition of farmers and commodity groups created to educate legislators and Americans about the importance of farming.”

    Mr. Fischer was asked about claims by those such as Mr. Marchand that the government subsidizes the U.S. sugar industry.  Mr. Doran’s response…

    “No, that’s another myth. We hear these things over and over again. We let the markets make those decisions. There are no subsidies going to sugar producers.

    “We do have safeguards in place because much of the rest of the world subsidizes their producers. So, we have some safeguards here so they can’t dump their sugar here. I think if you talk to most folks, they would see that as quite rational.”

    In fact, U.S. sugar producers receive ZERO tax dollars through the U.S. sugar program.

    What the U.S. sugar program DOES do is restrict sugar imports from foreign competitors whose governments DO subsidize their industries, as well as apply limited, targeted tariffs on sugar imports from countries that prop up their home-grown producers with subsidies.

    Quite rational, indeed.

    It’s not a “free market” when your competitors “cheat” by using subsidies to distort the true cost of production.  As such, the U.S. sugar program is a necessary safeguard to assure an international “fair market.”

    If some in Congress want to eliminate the U.S. sugar program, they need to focus on getting foreign competitors to first shed their training wheels.  Zero U.S. import protections in return for zero foreign subsidies.

    Zero for zero.  That’s not a myth.  That’s a fact.

  • Cheat Sugar, Not Cheap Sugar, is the Problem

    Cheat Sugar, Not Cheap Sugar, is the Problem

    By Chuck Muth, President, Citizen Outreach

    Well, another Valentine’s Day has come and gone, but not without the usual attack by Big Candy’s sweet-talkers on America’s sugar farmers.

    Ross Marchand of the Taxpayers Protection Alliance weighed in with a weekend column calling to “end the not-so-sweet sugar program” and urging President Biden to “cut out this confectionary con job.”

    Mr. Marchand’s column is filled with de rigueur misinformation about the U.S. sugar program, including the false claim that sugar farmers in America receive government subsidies and that targeted restrictions on certain foreign imports “create an unlevel playing field” for domestic candy manufacturers.

    The column goes on to claim that U.S. sugar farmers oppose “inexpensive, foreign competition and have lobbied hard to keep cheap sugar out of the country.”

    Here we go again…

    If it costs me 50 cents to make a widget and costs you 75 cents to make the same widget, but your government gives you a 40-cent subsidy so you can sell your widget cheaper than I can sell mine…well, that’s not exactly a “level playing field.”

    It’s not that American sugar farmers are opposed to “inexpensive, foreign competition.”  It’s that American sugar farmers are opposed to unfair, market-distorting, government-subsidized competition.

    It’s not “cheap” sugar that’s the problem.  It’s “cheat” sugar.

    Give U.S. sugar farmers a level playing field without foreign government subsidies and U.S. sugar farmers will out-produce their international competitors any day ending in “y.”

    If you want to eliminate the U.S. sugar program of targeted tariffs and import restrictions on government-subsidized foreign sugar, fine.  But only if those foreign government subsidies are eliminated at the same.

    Zero-for-Zero.  Zero U.S. tariffs and quotas in exchange for zero foreign subsidies.  No unilateral disarmament.  So let it be written; so let it be done.

  • India Battling Sugar Subsidy Addiction

    India Battling Sugar Subsidy Addiction

    By Chuck Muth, President, Citizen Outreach

    Writing for Business World, Urvi Shrivastav notes how tough it is to kick the government subsidy addiction once hooked.

    India, the largest global sugar consumer and second-largest sugar producer, is sitting on a glut of sugar and payments from mills to farmers have been delayed.

    “This is because, sugar mill owners have been saying, excess sugar production, along with decline in consumption, has depressed domestic sugar prices leading to accumulation of arrears.

    “Since the mills are unable to garner profit, they are not able to pay fair and remunerative price to sugarcane farmers. The sugar prices are neither going up, nor are we seeing an increase in consumption.”

    Market reality: Supply high, demand low, prices drop.

    In order to get domestic prices up and pay farmers what they’re owed, the glut needs to go.

    “An obvious solution to this issue,” Shrivastav continues, “seems to be an increase in export of sugarcane and sugar products.”  Which is exactly what they did last year.  However…

    “The high export numbers last season were possible only due to the subsidy programme offered by the government.”

    And instead of farmers producing less sugar to prevent another glut, the export subsidies have resulted in “sugar production rising in the country.”

    Indeed, as Isaac Newton taught us, for every action, there is an equal and opposite reaction.  And the reaction this year by the Indian government was to “drastically reduce” the export subsidies, much to the dismay of the Indian Sugar Mills Association.

    “The mills are now reluctant to export,” Shrivastav reports, “because of the huge gap between cost of manufacturing and the current price of raw sugar in international markets.”

    This is what happens the government starts interfering with the free market.  And addictions to government subsidies are hard to break.

    Which is why the new Biden administration should continue supporting the U.S. sugar policy of protecting American sugar producers – who get no government subsidies for production or export – from international competitors who do.

    Citizen Outreach is a free-market grassroots advocacy organization. For more information, please visit www.CitizenOutreach.org

  • Trump, Biden and U.S. Sugar Policy

    Trump, Biden and U.S. Sugar Policy

    By Chuck Muth, President, Citizen Outreach

    Writing post-election, the Mish Talk blog asked: “How Will Biden Differ from Trump on Trade and China Policy?”

    “Trade was not a key subject in the debates,” Mish noted.  “So what do we expect of Biden?”

    Mish went on to examine a host of international trade issues – including Free Trade Deals, Trade Promotion Authority, Domestic Reshoring, China, Bilateral Trade Relationships and WTO Reform.

    He also took a shot at U.S. sugar policy…

    “The irony in all of this is that next to France, the US is the most protectionist country on agricultural policy. Look no further than the sugar lobby…  It makes no sense to drive US candy manufacturers out of the US over sky high sugar prices.”

    Well, it may be a new year, but there’s nothing new coming out of the Big Candy lobby.  So once again, onto the breach…

    1.)  U.S. sugar policy doesn’t protect American sugar producers from international competition.  It protects American sugar producers from UNFAIR international competition.

    American sugar producers do NOT receive government subsidies.  Many foreign competitors do.  That creates an unlevel playing field.

    U.S. quotas and tariffs on sugar imports from foreign countries that “cheat” simply level the playing field.

    2.)  Sugar prices in the U.S. aren’t “sky high.”  In fact, sugar costs about the same in America as in other developed countries, and it is much cheaper today than the 1980s and ‘90s when corrected for inflation.

    During that same period of time, on the other hand, the cost of a candy bar has gone through the roof.  Which brings us to…

    3.)  It’s not the cost of sugar that’s been driving candy manufacturing out of the country.  In fact, candy operations have been expanding in America in recent years.  And any company that relocated did so in search of lower costs of labor, taxes, insurance and government regulations – the same factors that drove a wide variety of manufacturing overseas.

    In international trade, President Trump insisted on “America First” policies.  If Joe Biden is going to be different, does that mean a return of “America Last” policies?  Let’s hope not.

  • GUEST COMMENTARY: How the Whiskey Industry Could Point Way for Sugar Sector

    GUEST COMMENTARY: How the Whiskey Industry Could Point Way for Sugar Sector

    (Gerard Scimeca) – The whiskey industries and Scotland and the U.S. are leading the way in what could prove a template for other sectors — most notably the U.S. sugar industry — suffering under the weight of oppressive tariffs and unfair trade practices.

    Unions in the U.S. and UK are in agreement, said Keir Greenaway, a labor leader with GMB Scotland, adding recently that “these tariffs are a job-killer on both sides of the Atlantic and it is in everyone’s interests for talks to reach a ‘zero for zero’ arrangement for single malt.”

    In other words, both sides are feeling the pain and want to work toward an arrangement in which neither imposes any tariffs on the other’s whiskey, allowing market forces to determine success or failure rather than government protectionism.

    The desired outcome among U.S. sugar producers is that they might eventually be allowed such a level playing field on which to compete. And at present, the playing field is as uneven as they come, with U.S. producers at huge disadvantage to their global competitors due to massive foreign subsidies.

    “The sugar market is the most volatile commodity market in the world,” the group Americans for Limited Government said. “America’s sugar farmers compete, unfairly, against heavily subsidized foreign producers, justifying the current no-cost, U.S. sugar policy program to stabilize the domestic sugar market.”

    While the U.S. sugar industry is not subsidized, the U.S. government’s response to foreign subsidies is interest-bearing loans to U.S. farmers and import quotas to protect U.S. consumers and farmers from a glut of subsidized sugar.

    A report last year by researchers at Texas Tech University found that “government intervention in the world sugar market remains extreme and widespread with a wide variety measures to support domestic sugar producers.” Due to subsidization, there is a continuing cycle of distorted prices and alternating supply gluts and shortages for consumers that sows uncertainty for farmers.

    The report noted the highly protectionist and predatory tactics of the world’s top sugar exporting nations, including Brazil’s $2.5 billion and India’s $1.7 billion in annual subsidies to their domestic sugar industries to undercut competitors. Due to subsidies, even in the throes of a pandemic, India is set to record a banner year with its highest level of sugar exports in a decade.

    Other regions singled out in the report include Thailand, Mexico, China, Japan, Canada and the European Union. This is in addition to additional protectionist tactics employed, including import tariffs, loan forgiveness, price controls and direct payments to producers for equipment and supplies.

    The most flagrant abuser of sugar subsidization is Brazil, which controls nearly half of global sugar exports through its subsidies, while India is also among the chief offenders, propping up its growers through a complex web of export subsidies, trade barriers, no-interest loans and debt forgiveness.

    The U.S. sugar industry is hoping to gain traction with its own push for trade equity. U.S. House lawmakers have a proposal that would adopt a zero-for-zero policy, which would eliminate U.S. sugar quotas in exchange for the end of foreign subsidies across the board. As with the whiskey proposal, the sugar measure would allow price to be based on actual costs, not twisted out of shape by government tariffs and subsidies.

    “Too much of anything is bad, but too much good whiskey is barely enough,” said Mark Twain, who we can readily imagine rejoicing at the press for zero for zero tariffs on whiskey. And what might Twain say about the unfair global mess that U.S. sugar producers currently face?

    The famously profane Twain would likely have much to say that is unprintable.

    Mr. Scimeca is Vice President of Consumer Action for a Strong Economy

  • What Congress Can Learn from Vietnam on Sugar Policy

    What Congress Can Learn from Vietnam on Sugar Policy

    By Chuck Muth, President, Citizen Outreach

    Members of Congress hoping scuttle the U.S. sugar program of targeted tariffs and import quotas on international competitors that subsidize their sugar industries should take a look at what’s going on in Vietnam right now.

    According to a report published by the Vietnam News Agency (VNA) last week…

    “After many years of maintaining a protection policy, Vietnam began to implement its commitments under the ASEAN Trade in Goods Agreement (ATIGA) from the beginning of the year, by not limiting the sugar imported from ASEAN countries and tariffs being cut to zero percent.”

    Exactly what Big Candy’s lobbyists in DC are hoping to achieve under a new Biden administration.  But the results aren’t exactly sweet…

    “Since the removal of tariff quotas, the total amount of sugarcane imported into Vietnam has increased rapidly, reaching approximately 1.3 million tonnes in the first 10 months of 2020. In addition, the price of imported sugar is also very low, causing many difficulties for sugar enterprises as well as farmers.

    “Faced with cheap imported sugar, Vietnam’s domestic sugar price has fallen to a very low level, leading to low sugarcane prices.  This, the conference was told, was one of the reasons sugarcane farmers have fallen into debt. …

    “The country now has 29 sugar plants in 2019-20 crop season, 11 less than the previous season. In the 2020-21, it is forecast to be a difficult year for the local sugar industry, especially in the complicated situation of the COVID-19 pandemic. …

    “Nguyen Van Loc, secretary general of the Vietnam Sugar and Sugarcane Association (VSSA) said they have sufficient databases available to identify imported sugar originating from Thailand as dumped and subsidised for dumping in foreign markets. In addition, it also has clear evidence that dumped imported sugar causes significant damages to the domestic industry.”

    Eliminating the U.S. sugar program would open up the spigot of cheap, government-subsidized imported sugar from nations that “cheat” and would result in unfair competition for American sugar farmers and producers.

    Big Candy wants to change U.S. trade policies from “America First” under President Trump to “America Last” under a President Biden.  Congress shouldn’t play along.

  • Ghana Turns Wrong, India Turns Right on Sugar Subsidies

    Ghana Turns Wrong, India Turns Right on Sugar Subsidies

    By Chuck Muth, President, Citizen Outreach

    It’s not just the major sugar producers of the world – including Brazil, India and Thailand – that artificially prop up its sugar industries with government subsidies.  Smaller producers are hopping on the bandwagon as well.

    GhanaWeb.com reported last week…

    “The Ghana Export Promotion Authority (GEPA), has assured that it will provide special incentive and cost reduction packages for companies that venture into local manufacture of sugar and sugar confectionery including small scale manufacturers.

    “This strategic intervention, according to GEPA, is designed to promote Ghanaian manufactured sugar in the sub-region and other African markets. …

    “While some 14,100 acres of sugarcane is expected to be cultivated to feed the plant under the scheme, the total output of fully operational factory of 250,000 metric tonnes will still be less than the 375,000 metric tonnes required nationally. With the deficit, Ghana still needs additional sugar for the domestic market and much more for exports.

    “Indeed, Ghana needs to see more investments in sugar factories if the country is to become a net exporter of sugar in the sub-region.”

    To be clear, under current U.S. sugar policy American sugar farmers receive no such similar “special incentive(s) and cost reduction packages.”

    In reality, U.S. sugar policy only restricts sugar imports from countries that undermine the global free market by unfairly subsidizing their own producers, along with field-leveling tariffs on such subsidized imports.

    However, some potentially good news out of India last week, as reported by Reuters…

    “Indian sugar mills have for the first time in three years (approved) export agreements without the support of government subsidies as they scramble to pay dues owing to farmers, four industry officials told Reuters. …

    “India is the world’s biggest consumer of sugar, but as the second biggest producer, produces more than required. The government uses subsidies to encourage exports and ensure mills make payments to cane farmers.”

    Let’s hope this is a permanent change in policy.

  • Preserve U.S. Sugar Policy Regardless of Presidential Election Result

    Preserve U.S. Sugar Policy Regardless of Presidential Election Result

    By Chuck Muth, President, Citizen Outreach

    Sugar farmers in India are sitting on pins and needles these days.

    Reuters reported last month that…

    “Subsidies are set for one year from Oct. 1. The government has extended the 2019/20 subsidy until December, but in practice exporters will not receive more support as they have already met their 6 million tonne export quota under the scheme.”

    The Indian Sugar Mills Association noted in a statement this week…

    “Decisions regarding export policy along with export subsidy for the sugar year 2020-21…are still awaited from the government.”

    The Hindu added on Tuesday…

    “In his first press conference as Food Minister on October 30, Piyush Goyal had said that sugar export subsidies were not under consideration as international prices are stable, adding that government would re-examine the proposal if needed.”

    However, a senior Food Ministry official dealing with sugar policies “told The Hindu that the subsidy scheme is back on the table.”

    “The government is still considering the proposal, but there is no policy decision yet.”

    Interesting that reports on sugar subsidies regularly include the word “scheme.”  But accurate.

    And it’s not just India that continues to manipulate its sugar industry with government interference in the free market.  From a Bloomberg report on Tuesday…

    “South Africa signed a plan to support its ailing sugar industry that was delayed by almost eight months due to the onset of the coronavirus pandemic. The so-called Sugar Master Plan agreed by the government, farmers, industrial users and retailers in the 14 billion-rand ($908 million) industry seeks to stem a crisis caused by a flood of cheap imports and a tax on sugar-sweetened drinks that lowered demand from beverage makers.”

    Government meddling in the international sugar market is why the current U.S. sugar policy of tariffs and import quotas needs to remain in place regardless of who the next President is.

  • Two-Cents Worth: The Cost of Protecting American Sugar Farmers

    Two-Cents Worth: The Cost of Protecting American Sugar Farmers

    By Chuck Muth, President, Citizen Outreach

    In an opinion column published earlier this month by The Financial Express, Jeffry Frieden wrote about how politics affects economic policies in various countries, noting that “special-interest groups do seem to play an outsize role around the world.”

    He went on to repeat a disingenuous claim by Big Candy special interests that Americans are paying “two to three times the world price for sugar.”  He continued…

    “For decades, subsidies and trade barriers have raised the price of sugar to the benefit of the sugar planters and farmers and to the detriment of everyone else.”

    First, U.S. sugar farmers do NOT receive any taxpayer-funded government subsidies.

    Secondly, many of the largest international sugar competitors DO receive both direct and indirect government subsidies.

    Which means that world sugar prices are artificially low, not that American sugar prices are artificially high.

    Thirdly, yes…U.S. sugar policy slaps government-subsidized foreign sugar with field-leveling tariffs and quotas.  Such “trade barriers” are both reasonable and necessary to combat global competitors who are “cheating.”

    As for “to the detriment of everyone else”…

    The cost of domestic U.S. sugar has remained almost exactly the same as it was back in the Reagan administration.  During that same period, however, the cost of a chocolate bar or can of soda has shot through the roof.

    So don’t blame American sugar farmers for the higher prices.

    Lastly, even Mr. Frieden admits the difference between the market price for U.S. sugar and the below-market price for international subsidized sugar amounts to “a couple of cents a day for the average American.”

    Not exactly much of a “detriment.”

    If the Big Candy special interests really want Congress to do something to lower production costs, they’d focus on the cost of labor, taxes, insurance and regulatory compliance rather than “a couple of cents a day” for Made in the USA sugar.