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Yoho Plan Best Hope for Free Market Sugar Policy

In a new white paper titled “Getting rid of sugar subsidies: A look to the future after decades of failure,” Rick Manning, Vice President of Public Policy and Communications for Americans for Limited Government, maintains that a proposal introduced by Rep. Ted Yoho (R-FL) “is a chance for conservative free-market supporters to finally move the ball toward ending sugar subsidies.”

The Yoho Plan (HCR-39), euphemistically known as “zero for zero,” would result in the elimination of the oft-criticized U.S. sugar program, but only “by the agreement of other major sugar producers around the world to do the same.”

The “Big Four” sugar producers specifically singled out in the report as critical to any effort to usher in a worldwide free market are Brazil, India, Thailand and Mexico.

Brazil currently “dominates the world market with 25 percent of global production and 50 percent of all exports in the world.” The South American nation has “aggressively” maintained its dominance in the market “through approximately $2 billion worth of loans for growers, mills and ethanol facilities” in addition to “$2.5 billion in sugar subsidies, as well as another billion in various special bailouts.”

India, the world’s second largest producer of sugar, is breathing down Brazil’s neck. The country’s government has “increased supports for sugar exports” in an effort to almost double the current level of 1.3 million tons “in spite of a five year glut on the worldwide sugar market.”  Without the government subsidies, farmers there would “choose an otherwise more lucrative crop.”

Thailand, the world’s second largest exporter of sugar, has no plans to concede market share. “The new military government has plans to immediately and dramatically expand production by opening up new state-owned land for sugar production.”  Manning writes that “such expansion is likely being fueled by government programs, which in the past have included preferential loans, production quotas, government-set domestic prices and import tariffs.”

For its part, Mexico outright owns some 20 percent of the nation’s sugar industry and in August was “found by the U.S. Department of Commerce to have engaged in unfair trade practices” related to its sugar exports to the U.S. under NAFTA.

Free-market conservatives have been trying to end the U.S. sugar program for decades, but for a variety of reasons outlined in the paper have “failed spectacularly.” The Yoho Plan introduces a new way “to end sugar subsidies that solves both the political and practical problems that have defeated free market efforts” in the past.

Congress should give the Yoho Plan a shot. What do we have to lose?