(NAFB)--American Sugar Alliance Director of Economics and Policy Analysis Jack Roney says a recently released report underscores the importance of maintaining the current U.S. sugar policy. He says the report shows that Brazilian government programs provide nearly 2.5-billion dollars a year in sugar subsidies - giving Brazil a leg up on its competitors and distorting global prices. Roney says U.S. sugar policy was designed to shield consumers from foreign market manipulation and ensure an affordable, homegrown supply of a food staple. While U.S. sugar producers are highly efficient - Roney says disarming unilaterally while foreign subsidies run rampant would lead to job loss and leave us dependent on unreliable, subsidized foreign sugar.
According to the American Sugar Alliance - Brazil’s subsidization has helped the country gain a nearly 50-percent market share of global sugar exports. In the past - it’s been difficult to pinpoint the country’s policies because of poor data reporting and non-transparent programs. But sugar and ethanol expert Patrick Chatenay from the United Kingdom-based company ProSunergy spent months unearthing Brazil’s subsidies and recently made his report available to U.S. lawmakers. The sugar and ethanol subsidies detailed in the study include direct payments, debt forgiveness, usage mandates, lower tax rates for sugar producers and special interest rates on government loans. The study notes actual subsidization amounts could be much higher than 2.5-billion because of unreported debt restructuring. But Chatenay is certain Brazil’s policies have a profound effect on global sugar prices - estimating Brazil would need a 15-percent increase in sugar prices to replace the government supports.
According to Chatenay - policies in Brazil and other countries make sugar one of the world’s most distorted commodity markets. He says the world market price is a dump price and should never be used as a yardstick to measure what benefits or costs may accrue from free trade in sugar. The American Sugar Alliance believes this work will help educate lawmakers about the distorted dump sugar market and the consequences of becoming more dependent on it by weakening current U.S. sugar policy.