Sugar policy study uses Europe's reform as warning for the U.S.

By Agri-Pulse staff

© Copyright Agri-Pulse Communications, Inc.

COEUR D'ALENE, Idaho, August 7, 2012 - The American Sugar Alliance released a study of Europe's 2006 sugar policy reform during its 29th International Sweetener Symposium in an effort to deter opponents of U.S. sugar policy from implementing similar changes.

“In short, the 2006 EU Sugar Regime reform implemented many of the ideas promoted by opponents of the current U.S. sugar policy,” wrote the report's author of the UK-based company ProSunergy, Patrick Chatenay.

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According to his report, since the EU opened up its market for more sugar imports to encourage more competition, its strong connection to the volatile world sugar market resulted in several negative consequences. He said sugar manufacturers are struggling to find an adequate supply and witnessed an increase of 40 percent in sugar price within the last year. Chatenay noted that the EU's previous sugar policy was much like the United States', although the EU exported millions of tons of subsidized sugar onto the world market.  

According to this report, since the 2006 Sugar Regime change, “83 EU sugar mills have been closed, leading to 120,000 lost jobs; bulk refined sugar prices have increased 10 percent; volatile price swings and supply shortages have plagued Europe's sugar markets; and sugar policy increased costs to taxpayers up to $1.6 billion per year.”

The main lesson for the United States “has to be that, by letting imports determine the ultimate availability of sugar, the EU has lost control over its supply of this essential food ingredient,” he said. 

The Sweetener Users Association, a representative of U.S. companies that use sweeteners in their products, is one organization working to make U.S. sugar policy more market-oriented. Agralytica vice president Thomas Earley spoke on behalf of the organization during the symposium.

He encouraged domestic marketing allotments to be established at levels that do not artificially restrict sugar supplies in the U.S. He also criticized the sugar program for making sugar prices higher for candy and beverage companies, forcing them to establish themselves in Mexico and other nations.  However, American Sugar Alliance director of economics and policy analysis Jack Roney claimed “the real reasons candy companies are leaving” include lower health insurance costs and wages. 

Chateny's study questions the benefits of increasing imports and relying on a more competitive market for the sugar industry. He noted that allowing the world markets to determine price will include natural cycles, “but you might have enormous costs not picked up by the market.” In the EU, he said taxpayers now pay $1.6 billion per year for grower support through the Single Farm Payment system, similar to direct payments. 

“In the U.S., adding to the cost of farm policy is intolerable,” he noted, recognizing that although support exists for establishing an open market in U.S. sugar policy, it is highly unlikely to be implemented since it would add taxpayer costs to farm policy. 

House Agriculture Committee chief economist Bart Fischer agreed with Chatenay's sentiments during the symposium, commenting that a sugar program operating without direct cost to the taxpayer would be maintained in Congress and that he can't see “how replacing the program with anything that costs more than nothing can be good policy.”


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