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Topic:
» U.S. Sugar Policy Consumer Costs
» U.S. Sugar Producers = U.S. Jobs
» U.S. Sugar Producers Efficiency
» U.S. Sugar Policy and Foreign Debt
» International Trade and Sugar Policy Costs
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World Sugar PriceIssue: There have been erroneous claims that persist that there is a vast quantity of sugar on the “world market” that could supply domestic needs much more cheaply if it were not for U.S. sugar policy. The so called “world price” for sugar is essentially meaningless, reflecting only a small residual or “dump” market of highly subsidized sugar. The price for his sugar is commonly acknowledged frequently to be well below actual costs of production and to bear limited, if any, relationship to the actual prices paid by consumers or received by producers. Of the nearly 170 countries in the world, about 110 produce at least some sugar. According to the U.S. Department of Agriculture, all of these 110 countries subsidize their sugar production, consumption an/or trade in some way. This makes sugar one of the most heavily subsidized and therefore distorted markets in the world. About 75 percent of the world’s approximately 114 million metric tons of sugar produced annually is consumed in the country where it is grown and processed. Only the balance, 25 percent, is available for trade and is sold on what is called the “world sugar market.” Because it is a market of last resort for sellers, a dumping ground, and remains relatively “thin” compared with world production and demand, this dump market is historically the most price-volatile of all commodity markets. In the recent past, prices have ranged from more than 60 cents a pound in 1974 and more than 40 cents a pound in 1980 to less than 3 cents a pound in 1985.
Without exception, sugar exporting countries (and this includes the European Union, which now dumps about 6 million tons of sugar into the “world market” each year), utilize government-supported organizations to control marketing and pricing for both domestic and foreign sugar. Similarly, in numerous importing nations such as Japan, the government is directly involved in sugar purchase programs aimed at stabilizing prices and assuring supplies. In the absence of U.S. sugar policy, American consumers would be at the mercy of wildly fluctuating prices and supplies of sugar, an essential link in our food chain. U.S. farmers would be forced to compete in a market dominated by the governments of exporting nations which are dumping subsidized excess supplies on the so-called “world market.” U.S. Sugar Policy Myth: U.S. sugar policy prevents American consumers from taking advantage of a vast supply of cheaper world market sugar. Fact 1: A reliable supply of foreign-produced sugar, which could meet all requirements of U.S. consumers, simply does not exist. U.S. consumers use about 9 million tons of sugar each year, which is equal to more than a third of the total sugar treaded on the world market each year. Fact 2: Significant purchases from the world market by the U.S., or any other country, have a significant impact on the world price. The world sugar market is by far the most volatile of any commodity market, mainly because it is so thinly traded. In addition, because sugar is an essential food ingredient, commercial buyers have tended to be relatively insensitive to rising prices. Over recent years, the so-called “world price” of sugar has ranged fro more than 60 cents a pound in 1974 and more than 40 cents a pound in 1980, periods when there was no sugar program, to less than 3 cents a pound five years later.
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