Sugar 101: Distorted Global Sugar Market Threatens U.S. Farms
Sugar has earned the dubious distinction of being among the world’s most distorted commodity markets.
But what does that mean – and how does it harm our farmers here at home?
Virtually all sugar-producing countries offer government subsidies, market protections, or trade restrictions to their domestic sugar industries. Approximately 70% of the world’s sugar exports come from just 3 countries – Brazil, India, and Thailand – each of which heavily subsidize their own sugar producers. For example, a 2024 U.S. government report found that India subsidizes its domestic industry by as much as $17.6 billion a YEAR.
Subsidies and government interventions fuel overproduction. Then, instead of allowing their own markets to be flooded with surplus sugar, which depresses domestic prices and devastates their own farmers and factory workers, countries dump their excess sugar on the global market. The dumped sugar drives world sugar prices down below what it costs to produce that sugar in the first place.
The world price is so depressed by subsidies and dumping that, over the past 25 years, the world average cost of producing sugar has exceeded the world price by nearly 40% on average.
Every year, the U.S. Department of Agriculture puts together thousands of reports, published as part of the Global Agricultural Information Network (GAIN), including annual reports that detail many ways foreign governments are intervening in their domestic sugar markets.
We’ve saved you some time and compiled sugar market interventions into an easy-to-read report here.
Even though America is the 3rd largest importer of sugar in the world, the U.S. does not allow unfettered access to its sugar market. Instead, existing trade deals allow 41 countries to export specific amounts of sugar to the U.S. while paying low or no tariffs. Raw or refined sugar that comes in above those pre-determined amounts is subject to additional tariffs (called "tier-2" or “over-quota” tariffs), which were initially designed in the early 1990s to prevent subsidized foreign sugar from being sold at rock-bottom prices that would drive our own sugarbeet and sugarcane farmers out of business.
Those over-quota tariffs have not changed in 26 years and do not reflect any of the inflationary pressures that have affected sugarbeet and sugarcane producers and sugar processors since 2000.
Nor have they kept pace with foreign countries’ increasing support for their sugar industries while they continue to dump sugar well below the global cost of production.
Foreign governments are subsidizing their own sugar producers to the tune of billions of dollars and then exploiting outdated and weakened U.S. sugar tariffs at the expense of American farmers, American workers, and American households. American farmers and workers are facing catastrophe.
In total, it is estimated that American sugarbeet and sugarcane farmers have lost more than $3 billion in potential income over the past 2 years due to highly subsidized over-quota foreign sugar.
Everyone knows that food security is national security, and we must continue to foster trade policies that allow our domestic farmers and sugar processors to survive. That includes immediately modernizing the over-quota sugar tariffs to reflect the economic realities of today.
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