In response to a Wall Street Journal article about possible USDA actions to cope with record sugar surpluses, the American Sugar Alliance (ASA) released the following statement and background information.
"Congress designed sugar policy to run at the lowest possible taxpayer cost and directed the USDA to do all within its power to keep the cost at $0. The USDA has done just that every year since 2002, making sugar the only commodity program to run at no cost to the federal government.
“Unfortunately, a flood of unneeded subsidized imports and the resulting oversupply is making the USDA's task harder, which is why the secretary is looking for ways to keep any costs to a bare minimum. The Feedstock Flexibility Program, which is one tool being considered, would save taxpayers money because it would be much cheaper than the alternative — costly loan forfeitures caused by severely depressed market prices."
The article is problematic on a number of fronts, according to ASA.
• Readers are left to believe America has a closed sugar market, when, in fact, America is the largest sugar importer in the world.
• Pre-emptive USDA actions would save taxpayers money because loan forfeitures would be more costly — a fact that is conveniently left out of the story.
• That sugar policy has operated without cost to taxpayers since 2002 is never mentioned in the article.
• Readers are told sugar prices are higher in the U.S. than on the world dump market; however, world prices are actually higher than U.S. prices once transportation is accounted for (transportation is factored into the U.S. price).
• The record oversupply problem plaguing the U.S. market is surprisingly never mentioned in the article — oversupplies caused largely by unneeded subsidized imports and a loophole in NAFTA.
• Ironically, candy companies lobbied for the current market situation, and got exactly what they hoped for — an important point that the reporter fails to make. See the Sweetener User Association’s most recent letter requesting oversupplies here.
• That candy companies are now pushing a bill to force the USDA to artificially create oversupplies and essentially set a price ceiling is likewise not reported.
• The article is misleading about the drop in U.S. price, which has been more severe — a 50 percent decline since last summer — and takes prices back to 1980s levels.
• Grocers and food manufacturers have passed none of their savings from that 50 percent producer price drop along to consumers. This might explain why confectioners are booking impressive profits and are expanding production – the opposite of what the Wall Street Journal article leads readers to believe.
• Finally, the reporter assumes that the price of candy and the price of sugar are linked, even though sugar only makes up about 2 percent of a candy bar's cost. If these prices were linked, why are candy prices climbing while sugar prices hover at near-record lows?
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