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India Again Shows Why U.S. Sugar Program is Still Needed

(Chuck Muth, President, Citizen Outreach) – Why does U.S. sugar policy restrict sugar imports and/or apply import tariffs on some foreign competitors?

To level the playing field in the global market.  A new example…

According to a report over the weekend in Business Standard, dozens of sugar mills in India “are selling sugar below the minimum selling price” established by the government and “offering cash incentives to purchasers to bypass the regulatory eyesight.”

“Sugar mills are currently going through a massive slowdown in pick up from the bulk consumers, including ice cream and beverage manufacturers,” the publication reported.

“The government has raised the MSP (minimum selling price) at the behest of the industry,” said Sanjay Khatal, managing director, Maharashtra State Cooperative Sugar Factories Federation.

“Now, the industry must adhere to the government’s prescribed guidelines,” he added, urging mills “not to indulge in wrong practices.”

But they are.

It is not a free market when the government is setting the price.

It’s even less of a free market when producers are receiving cash incentives and other subsidies that distort prices.

That’s why restrictions on certain sugar imports from foreign competitors are applied by way of the U.S. sugar program.  They are nothing more than a counter-balance against competition that’s not competing fairly.

The solution is for Congress to adopt Rep. Ted Yoho’s “Zero for Zero” resolution which would eliminate the U.S. sugar program but ONLY in return for foreign governments simultaneously zeroing out their market-distorting subsidies.

Congress should not unilaterally throw American sugar producers to foreign wolves by ending the U.S. sugar program without mutual concessions which level the playing field and establish a true global free market absent government meddling.

It’s just common sense.