The Coalition for Sugar Reform has asked the Senate Agriculture Committee to abolish antiquated aspects of the country’s sugar trade policies in the proposed 2012 Farm Bill, especially U.S. subsidies for domestic producers.
The coalition said these subsidies “distort free markets through an intrusive, big government regime that dictates sales quotas to individual companies” and “hamper U.S. export policy by compelling our (trade) negotiators to defend protectionist policies.”
The 2008 Farm Bill made matters worse for sugar trade when Congress prohibited the U.S. Department of Agriculture from establishing annual import quotas at any level higher than the bare minimum required under international law, regardless of actual U.S. market needs. The coalition specifically noted:
- Markets have been chronically short. Not in a single year has the market achieved USDA’s traditional goal of a 14.5 percent ratio of ending stocks to use, indicating chronic undersupply.
- Prices paid by food and beverage companies for refined sugar have risen significantly, averaging a record 55.8 cents per pound in fiscal year 2011, up from an average of 28 cents under the 2002 Farm Bill. Prices remain above 50 cents per pound – more than double the support price of refined beet sugar.
- Program-related additional consumer costs, estimated a decade ago at $1.9 billion a year by the Government Accountability Office, are now much higher – $4 billion according to American Enterprise Institute research, largely because the gap between U.S. and world prices is at historically high levels.
- As a result, consumer prices for sugar set a record of 66.7 cents per pound in fiscal year 2011, more than 20 cents per pound higher than the average under the 2002 Farm Bill. By January 2012, prices for consumers rose still higher – to 71.7 cents per pound.
“Though the world sugar price has risen, U.S. sugar policy has caused our domestic prices to rise even more,” the coalition said. “Remember, although the U.S. refined sugar support price is 24.09 cents per pound and the world refined price is 29 cents, actual quoted prices in the U.S. domestic market are above 50 cents.
“Thus, in an international price environment in which world prices exceed the levels Congress has determined are sufficient to support U.S. producers, the U.S. sugar program has not disappeared from view – it has become, if anything, more intrusive and market-distorting than ever before.”
The coalition also said the U.S. government's outdated sugar policies have allowed Canadian sugar makers to exploit their advantage over U.S. producers in recent years.
"U.S. markets can be supplied quickly and efficiently, as most Canadian manufacturing centers are less than 90 minutes from the border and 50 percent of American consumers live within a one-day's drive," said Agriculture and Agri-Food Canada in a brochure. "In the last 10 years, the value of Canadian exports of confectionary products to the U.S. has increased fourfold, and in 2004, Canada enjoyed a trade surplus of US$700 million."