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The Sugar Industry Wants a Free Market

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There are a lot of issues that aren’t Virginia specific but which impact everyone of us and the dynamics of public policy on these issues is reflected in our everyday lives.

One of those issues is the price and availability of sugar. Sugar is in so much of what we eat. Take a look at a box of most prepared foods, and sugar is listed as one of the ingredients. So, although we don’t produce sugar in Virginia and we don’t refine sugar here, the price of sugar hits us in the pocket book most every day.

So when a long-time friend of mine asked me to take a look at the import/tariffs policy of the U.S. on sugar what I found was pretty interesting. As a free market kind of guy, and one who believes in free trade this issue was one of those that caught my attention.

So Last month, the Thomas Jefferson Institute hosted a small breakfast meeting during the annual gathering of the State Policy Network in Nashville to discuss U.S. farm policy and growing rates of agricultural subsidization around the globe. Because all Americans eat and depend on a secure supply of homegrown food, this is an issue that affects each and every one of us.

We zeroed in on the U.S. sugar program and a new concept known as the zero-for-zero sugar policy, where America would agree to roll back its sugar subsidies in return for commitments by other countries to do the same. In other words, a subsidy cease-fire so a free market can form. And the sugar industry here in the U.S. favors such a policy so it is not whetted to the current program and would rather have a level trading field where government subsidies and tariffs were eliminated.

We invited state policy leaders from the sugar producing states and the states that refine sugar to come and talk about this issue and a vast majority of those states joined us: California, Florida, Louisiana, Maryland, Michigan, Minnesota, Montana, Nebraska, Oregon, and Texas attended the briefing and contributed to a lively discussion.

We talked about sugar production in our various states. How the sugar producers in many cases also are the refiners. We talked about price fluctuation and how foreign governments subsidize their sugar industry and we do not. We talked about the revolving loan program used by sugar growers most every year where they borrow money from the government for planting and pay back the government with interest after the harvest. And we talked about the politics of working toward a truly free trade mechanism in the world sugar market.

A special thanks also goes to Louisiana Attorney General Jeff Landry, a free-market conservative, who was an early adopter of zero-for-zero and offered a unique perspective as someone who grew up working in agriculture. His perspective was most helpful.

In the coming months, TJI will be exploring this issue in greater detail and we are currently working on a report about the best ways to keep farm subsidies and government policies from manipulating the market. In the meantime, if you are interested in learning more on the topic, be sure to check out the links below.

Sugar is not a “big deal” to Virginia’s economy but the price sugar does impact each and every one of us most every day in one way or another.

Oftentimes we think that the industries that get some sort of government “protection” through tariffs or payments for not growing crops, etc are the ones who don’t want freer trade policies. In the case of sugar, it seems that the industry would like to have government out of the picture – our government and foreign governments as well. You see, foreign governments are subsidizing our competitors in order to lower the price of sugar below what our U.S. growers are able to do.

This is an interesting issue and the study we will soon release will shine more light on what’s happening in the sugar industry.

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