The Hagstrom Report

Agriculture News As It Happens


Sweetener users, growers disagree over comparison with European Union program

The Coalition for Sugar Reform said this week that U.S. sugar growers’ claims that 2006 reforms to the European Union’s sugar policy helped create shortages and increased prices there are “nonsense,” as are charges the same would happen if Congress were to reform the U.S. sugar program.

But the American Sugar Alliance, which represents the growers, says a study of the EU reform that ASA released “has put the Big Candy lobby in a real bind.”

In a news release, the coalition, which is composed of the sweetener users and other groups seeking changes in U.S. sugar policy, said, that:
  • Tight sugar supplies in the EU are actually due primarily to the same reason as in the United States — the EU still has tariffs, import quotas and domestic production quotas that limit supply instead of real policy reform.
  • U.S. consumers and businesses are already being forced to pay more than consumers in Europe for sugar. U.S. consumers pay as much as $3.5 billion more than they would if U.S. sugar policy didn’t severely restrict domestic production and much-needed imports.
  • U.S. sugar growers and processors ignore the fact that largely as a result of the failed U.S. sugar policy, 125,000 U.S. sugar-using industry jobs were lost between 1997 and 2010.

The coalition also said its members agree with sugar growers’ claims that the industry is internationally competitive.

“This means that U.S. sugar production should not decline in a more market-oriented environment,” the coalition said. “The EU situation is different from that of the United States, as the EU is a high-cost producer of sugar. Therefore, it is not surprising that production declined in the EU when subsidies were cut.”

In an email, Phillip Hayes, a spokesman for the growers, said the EU case study “provides a good road map of what happens when you become more dependent on foreign suppliers. And we aren’t comparing apples and oranges here.”

“Large food manufacturers in Europe, long pushed to ease import restrictions in Europe and become more linked to the global dump market,” Hayes said. “This, they promised, would lead to ample supplies, lower sugar prices, and cheaper food for EU consumers.”

Large food manufacturers in the U.S. have long pushed to ease import restrictions in America and become more linked to the global dump market,” he continued. “This, they promise, will lead to ample supplies, lower sugar prices, and cheaper food for U.S. consumers.”

“Europe made the change, and the end result has been the opposite of what food manufacturers promised,” Hayes said. “EU prices temporarily tanked, which forced many growers out of business and led to considerable consolidation. Some foreign suppliers that relied on fair prices in the EU went out of business too.”

“All of a sudden the EU wasn’t an attractive market and, as global supplies constricted, Europe couldn't find enough foreign sugar. Worse yet, there was less of a domestic industry and fewer traditional foreign suppliers to pick up the slack,” Hayes said. “Now, six years later, sugar prices in Europe are higher than they were prior to reform. Grocery shoppers are paying more for sugar-sweetened foods. 120,000 people lost their jobs. Candy companies are complaining of shortages. And taxpayers are paying more.”

The coalition has acknowledged that Europe has experienced problems, but says that’s because the continent needs further liberalization of the sugar market.

“How exactly would that help?,” Hayes asked. “More dependence and fewer domestic producers would only leave EU candy companies and EU grocery shoppers more vulnerable to the whims of Brazil, Thailand, India and other heavily subsidized exporters.”

“The impact in America could be more pronounced because we are already more dependent on foreign suppliers than the EU was” Hayes added. “We currently import about 30 percent of our needs.”

“Finding people on Capitol Hill to get excited about adopting EU economic strategy right now is tough,” he concluded.

Tom Earley, the economist for the Sweetener Users Association, said at a briefing Friday that the Europeans had at least had the courage to reform their program, adding that the trend for “the big offenders like the EU” is to liberalize their sugar regimes.