Global glut puts spotlight on U.S. sugar subsidies

by November 6, 2013

As piles of leftover Halloween loot are picked over for what’s left of the good stuff, and the pumpkin pies and sugarplums of the next couple of months warm up in the wings, it’s a good time to take a look at the business of sugar.

Beet farming tractor and technicians

U.S. Department of Agriculture technicians harvest sugar beets and test for sucrose content. Photo: USDA

Whether you cover food, health care, agriculture, alternative energy or even retail, the sweet stuff likely has a role to play on your beat.  And with several news pegs afoot — from Mexico’s just-approved tax on sugar to price and subsidy issues to the upcoming wave of confectionery gifts that will be pushed in malls and shops — you’ll plenty of fodder for features.

First, subsidies.  Apparently a global glut of sugar has driven down prices worldwide, forcing the United States to fork out more in subsidies to domestic sugar growers — the highest level of subsidies since 2000, according to a Reuters report, which noted a huge wave of loan defaults by sugar processors.   The federal government, which gets forfeited sugar in the case of these loan defaults, reportedly is selling the excess to biofuel makers at a loss, as Bloomberg reports — but excess production still is causing a big surplus; the article is a decent primer on the way sugar prices are artificially propped up by a controversial system in place for decades.  Here’s a U.S. News & World Report article about the origins and costs of the sugar program, as well as a Sugar Reform Act afoot in the U.S. Senate and efforts to reshape sugar subsidies in conjunction with the pending farm bill.

Here’s the Environmental Working Groups’ Sugar Beet subsidy database; as you can see, no subsidies were paid in recent years but you can check out top recipients from earlier years and perhaps find producers in your area to see if big local players are participating in the default and forfeiture program.  To find out your state’s role in sugar production, check out this backgrounder from the USDA’s Economic Research Service, which outlines the major producers of sugar cane and sugar beets, both sources of sugar.   Industry sources  include the American Sugar Alliance, the Sugar Association and the U.S. Beet Sugar Association.  State and international groups are out there, as well.

And what’s the ripple effect of sugar subsidies?  A number of recent editorials are out against the program, like this one from syndicated columnist Froma Harrop, which says American candy makers are shipping jobs and production overseas to evade high costs here.  If your area is (or was) home to any iconic sweets-makers, you might ask them how the sugar subsidies affect their business and contrast that with input from area growers to depict the pros and cons of manipulated commodities prices.  Here’s a New York Times piece about a chocolate-maker that’s considering moving across the border to Canada, for example.   Check in with food processors and restaurants/restaurant supply companies about sugar-related costs as well.    The National Confectioners Association, the PMCA International Association of Confectioners and the National Confectionary Sales Association can probably point you in the right direction.  Don’t forget about non-candy makers like dairies, snack food companies, bakeries and the like which also use a lot of sugar in their products.

If you cover health care, again, the newly passed Mexican tax on sugary beverages — not to mention the fact that November is American Diabetes Month  (more on that in a future blog post) — could be a springboard for taking a look at the increasing evidence sugar plays an adverse role in the battle against obesity and ill health.