Sweetening Life in the Red River Valley Since 1974
February 20, 2019
Big and Small Subsidies in Last Week’s News
The global sugar market remains in turmoil, plagued for years by a subsidy-fueled oversupply. And as foreign sugar businesses struggle to stay afloat, governments around the globe are taking action.
Unfortunately for the market, the action being taken by most governments is to increase subsidies, which further depresses prices. Last week saw two governments – both big and small – intervene.
First for the big news.
India is rapidly expanding sugar production and exports thanks to government market interference. There, government officials have been steadily building upon a $1.7 billion-a-year subsidy system to bolster an inefficient industry.
The most recent announcement came last week as India’s government increased the selling price of sugar in a bid to help mills and farmers who are struggling with surpluses.
The irony of the government mandating a price hike to counter a government-driven oversupply was not lost on Tim Worstall, a columnist for the Continental Telegraph, an online European publication.
“We’ve an industry in oversupply. They’re making too much of the damn stuff. So, to deal with this we’re going to raise the minimum price? But, but, won’t that increase supply, reduce demand, making that oversupply even worse? Well, yes, it will, but you know election year politics….
“Yes, it’s election time, that’s why the Indian government has just raised the price of sugar. So, the money will flow through to the cane farmers who have lots and lots of lovely votes. And that’s it, that’s all there is to it. However stupid it is to raise the price of something already in oversupply.”
It wasn’t just a sugar superpower making news last week, either. Sugar oversupplies and rock-bottom prices are hitting small producers as well. Earlier this month, Kenya announced a direct subsidy of $27 million to sugarcane farmers to help them through this rough patch.
Unfortunately for Kenya’s producers, $27 million won’t even make a dent in the real issue that’s placing them at a disadvantage. Fixing the global subsidy problem and bringing about a fair market that gives all countries a chance to succeed is what’s needed.
That’s exactly what the Zero-for-Zero sugar policy, introduced by Congressman Ted Yoho (R-FL) in late January, aims to do. It would target foreign subsidies that are wrecking the global market and would roll back America’s no-cost sugar policy once a free market takes shape.
Yoho calls it a subsidy cease fire, and it’s the most refreshing piece of sugar policy news to come out of a government body in some time.
Yoho and his supporters rightly realize that sugar producers and consumers alike will win when we get government out of the global sugar business and let countries compete in terms of efficiency instead of subsidization.
Author: Phillip Hayes
Phillip Hayes is the Director of Media Relations for the American Sugar Alliance. He can be reached on cell at 202-271-5734 and on email at Phillip@sugaralliance.org.
On February 1, 2019, Minn-Dak Farmers Cooperative board chairman, Pat Freese was re-elected as Treasurer of the American Sugarbeet Growers Association (ASGA) for 2019 by farmer representatives from across the country who gathered for the ASGA annual meeting in Scottsdale, AZ.
Freese of Kent, Minnesota, has served on the Board of the ASGA since 2014. This is his third term as ASGA Treasurer. Pat and his wife, Diana, farm in Kent, Minnesota. He took over the family farm in 1985 and is a 4th generation farmer. Pat started raising sugar beets in 1991 and today raises barley, wheat (spring or durum), corn and soybeans. Pat and Diana have 2 children, Brent and Nicole.
He is an avid runner and enjoys sporting activities of all kinds.
Congratulations Pat!
To continue with a great tradition here at Minn-Dak Farmers Cooperative (MDFC), we will be awarding two scholarships for Shareholder/Grower applicants and Employee applicants. A committee will determine the winner, who will receive $1,500 and the runner-up, who will receive $1,000. Past recipients of the Minn-Dak scholarships are ineligible to apply.
You can obtain the guidelines and application by clicking here: Shareholder/Grower Application or Employee Application.
If you have any questions, please call 701-671-1322 or email nwulf@mdf.coop.
All scholarship applications must be postmarked by March 22, 2019. Recipients of the scholarships will be announced by April 26, 2019.
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