How in the world does a country “hampered by inadequate moisture and poor (sugar) cane quality, small farm size, lack of mechanization, and underutilization of cane mills” nevertheless find itself the world’s second largest sugar exporter?
Through the world of government intervention, that’s how.
In a recent study conducted for the American Sugar Alliance (ASA), agricultural economist Antoine Meriot writes that the government of Thailand “has been closely involved with the Thai sugar industry for decades, and has taken major steps to expand Thai sugar production and exports, regardless of world market pricing and needs.”
That revelation alone refutes the “free market” argument put forward by the U.S. candy industry and some in Congress for the elimination of our own domestic sugar program.
It is simply NOT a free market when the Thai government mandates an artificially high price for sugar sold within its borders, thus enabling producers to export sugar for a price well below global market prices – a practice “declared illegal by the World Trade Organization in 2005.”
It is simply NOT a free market when the Thai government is providing direct payments through its government-owned bank to its sugar cane farmers.
It is simply NOT a free market when the Thai government provides loans to sugar producers “at a fraction of market interest rates.”
It is simply NOT a free market when the Thai government sets “quotas for each (sugar) mill’s sales to the domestic market, with no limit on sales to the world market.”
This government intervention in Thailand’s sugar market has allowed the country to cement its position as the second largest exporter of the commodity in the world despite, as ASA points out, “a collapse of global sugar prices” over the past four years.
Make no mistake; Thailand is not unique in this regard. Indeed, the Thai government’s sugar support policies are not unlike those being provided to the sugar industries of Brazil, India and Mexico. It’s an “arms race” of sorts for government agricultural subsidies.
To expect U.S. farmers to compete in such a “free market” that clearly is anything but free from government meddling is to throw sheep to wolves. And despite American sugar producers being “among the world’s most efficient,” Jack Roney of ASA rightly points out that “they cannot compete in a world sugar market badly distorted by foreign subsidies.”
Before the U.S. can eliminate its sugar programs, the rest of the world needs to eliminate theirs.