Earlier this month John's commentary on free trade stirred up quite the controversy. In case you missed it, here's a taste...
“Efforts to open up trade are clearly good for the nation as a whole, but always involve some sectors being exposed to more efficient competition from abroad, even though our strong industries benefit more,” said John Phipps in his early May John’s World commentary. “One good example is sugar production. If we were to have truly free trade in sugar, I doubt much would be grown in the U.S. Too many countries like Brazil and Australia simply can grow it much more cheaply.”
His statements didn't sit well with the sugar industry. So, we gave the American Sugarbeet Growers Association the opportunity to respond. In this Farm Journal Report, we tell you why the sugar industry supports free trade, as long as the playing field is fair.
“It's what the thumb is known for: sugarbeets and dry beans,” says Matthew Reibling, President of Huron County Farm Bureau.
Jeremy Polega is one of those Michigan farmers who make a living off of growing sugarbeets. In this area, nearly every farmer grows the crop, typically comprising of a quarter to a third of a farmers' crop rotation each year.
“It's really good for the economy,” he explains. I mean, the company supplies hundreds of seasonable jobs.”
Good for the local economy, but as the U.S sugar industry will tell you, heavily subsidized outside competition makes it hard for these farmers to stay competitive. That’s why they rely on a sugar policy dating back to the 1990's to help. It consists of three things: price supports, domestic market controls and tariff rate quotas.
This U.S. sugar structure is one that the American Sugarbeet Growers Association feels is misunderstood and misrepresented including claims that sugar prices are too high.
“If you compare U.S. sugar prices with what consumers pay around the world, you would find U.S. consumers are paying 14% less,” says Luther Markwart, Executive Vice President of the Association.
He says you can go all the way back to Jimmy Carter era and would find sugar prices were just as low then as they are today.
“That 35 cent candy bar you used to buy, is now about $1.39,” says Markwart. “And in both cases, there's only 2 cents worth of sugar in it."
But another argument against the sugar industry is the subsidies U.S. farmers receive. Some even saying the sugar industry wouldn't be able to survive without it.
“We want a free market and compete in a free market, and we're trying to get to a free market by supporting a policy called ‘Zero- for-Zero,” says Markwart. If other countries get rid of their domestic policies, their supports, their export subsidies, we'll get rid of our policy."
The largest sugar producer and exporter in the world is Brazil, and Markwart says even that country receives help from their government.
“They get $2.5 billion a year in subsidies, and they devalue their currency,” he says
A little closer to home is Mexico, which ranks among the top five sugar producers. They, too, have subsidies.
“Mexico subsidizes and dumps sugar into our market, and their government owns 20% of their industry,” he explains.
Markwart says despite wanting to protect domestic production, imports are important to the U.S.
“Opponents say our sugar market is closed. The fact is, the U.S. is typically the largest importer of sugar in the world. We import sugar from 41 countries."
For Polega, misconception is a constant battle he has to face. Even on the production side, since 95 percent of sugarbeets today are genetically modified, consumers fear what they buy isn't safe. But he fights the misunderstanding by trying to raise the best sugarbeet crop he can, and this year, it looks to be off to a good start.