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Putting Sugar Prices in Perspective

Tuesday, April 18, 2017/Categories: Opinions

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Putting Sugar Prices in Perspective
 By: Galen Lee
 
March 20 served as the unofficial kickoff of the farm bill debate, as legislators, administration officials, commodity organizations, and rural business leaders came together to participate in a national Farm Bill Summit to examine the challenges facing agriculture.

One theme clearly emerged during discussions: Crop prices are low and the rural economy needs a strong farm safety net right now. 

Sugar is no different. Sugar prices are lower today than when Jimmy Carter sat in the Oval Office.  Yet, sugar finds itself in a unique position because our political opponents refuse to acknowledge today's market reality and continue to perpetuate misinformation about the cost of sugar.

Our critics largely consist of big confectioners who hope to gut no-cost sugar policy and further depress farmers' prices, even though U.S. consumers pay less for sugar than their counterparts in other countries.

Price will be central to the upcoming sugar policy debate, which is why it will be important for policymakers to cut through the spin and really understand what's happening in the marketplace. 

To get the real story on what U.S. consumers pay for sugar, we asked veteran journalist Ed Maixner to explore the global and domestic price trends. As his research concluded: "[B]oth wholesale and retail sugar prices in this country – for food manufacturers, grocery chains, and end consumers – are well below world averages."

In addition to appreciating rural America's economic realities, it is also important to remember why the country has a farm safety net in the first place.  To that end, I challenged participants at the Farm Bill Summit to ask themselves two essential questions.

First, is a strong agricultural sector in our nation's interest?

Since feeding and clothing citizens is key to national security, the answer is clearly yes.  It's why every civilization in history has had a farm policy, and it's why every country in the world invests in the production of food, fiber, feed and fuel.

Second, does agriculture face unique challenges that warrant government investment?

Again, the answer is yes.  The high cost of farming, the unpredictable nature of agriculture, and the foreign subsidies and dumping we face are unlike any others.

I can think of no other small businesses that must borrow so much money every year, only to run the risk of financial ruin if a seasonal storm strikes or a foreign government manipulates markets.

I can think of few Main Street stores that are under constant attack from extremists hoping to roll back the efficiencies needed to move forward – technologies like GMOs.

I don't know of many other occupations where low-cost, world-class producers – as we are in sugar – lose out to less efficient, highly subsidized competitors.

And I can think of no other industry that is comprised of such a tight-knit patchwork of families who come together to make our national economy hum.

Take sugar for example. While we are smaller than other crops, we still support 142,000 jobs in 22 states, and we still pump $20 billion a year into rural economies. But those numbers can shrink suddenly since most U.S. sugar companies are cooperatives, meaning they are owned and operated by farmers.

If sugar is not profitable, farmers lose more than our farms.  We lose our businesses, our investments, and our local economies.

Unfortunately, it's already happening. After more than a century in cane production, Hawaii stopped producing sugar in December amid low prices.  Their market was destroyed by international cheaters like Mexico, which was found guilty of dumping subsidized sugar into the U.S. market – a clear violation of U.S. trade law.

Hawaii is not alone. We have young beet farmers on the auction block right now for the same reason.

The decisions made in the coming months will carry real consequences for our families and our communities.  But based on the thoughtful conversations that occurred during the recent Summit – and armed with unassailable facts about important topics like sugar price –  I'm confident that smart policies can be crafted to chart a course for success.

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About the author: Galen Lee is a farmer from New Plymouth, Idaho, who currently serves as president of the American Sugarbeet Growers Association.

Source:       The Sugar Beat – American Sugar Alliance
                   Published in Agri-Pulse – April 17, 2017

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