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Sugar Program, Not Mexican Growers Causing Market Imbalance

August 5, 2014
by Candy & Snack TODAY

Washington — Changes made to the sugar program in the 2008 Farm Bill, not Mexican sugar imports, have resulted in market imbalances, according to agriculture policy expert Randy Green, principal at Watson Green, LLC.

During the 31st International Sweetener Symposium, Green added the current sugar program has resulted in the antidumping and countervailing duty petition against imports from south of the border.

“Mexico is a vital part of the U.S. sugar supply and has been since the implementation of the North American Free Trade Agreement,” he explained. “And while during the years U.S. imports of Mexican sugar have increased, they have increased at the expense of TRQ imports, not domestic production.”

Green, citing data on the result of the 2008 Farm Bill, compared the high cost of sugar in the U.S. with that of changes to world prices, noting this incentivized sugar growers domestically as well as in Mexico, resulting in a sugar surplus and low prices.

“This fluctuation in prices and supply during the past several years is not a sinister plot by Mexico; but rather, the ramifications of an outdated, protectionist U.S. sugar program that is in need of reform,” he added.

He recommended the program be managed more efficiently, with increased transparency at the least possible cost to American taxpayers. Green reports that during fiscal year (FY) 2013, the current sugar program cost taxpayers in this country $300 million and the Congressional Budget Office estimates an additional cost of $629 million between FY 2014 and 2024.

To alleviate this burden on taxpayers, Green proposed the use of re-export programs instead of the Feedstock Flexibility Program, which he says will always cost taxpayers through forfeitures or required government purchases. He also recommended the USDA publish alternative calculations for what the overall sugar allotment quality would be if there were no requirements guaranteeing U.S. sugar producers 85 percent of the domestic market.

“The 85 percent floor is in fact a constraint on the USDA’s ability to prevent program costs,” Green explained. “Publishing alternate calculations wouldn’t directly reduce costs, but would tell markets how the USDA would have operated the program but for the 85 percent floor.”

During the symposium, USDA Undersecretary for Farm and Foreign Agricultural Services Michael Scuse reinforced the agency’s commitment to ensuring an adequate sugar supply, adding that it has the necessary tools to increase supplies if needed.

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