A sugar industry economist said today at a hearing of the House Agriculture Committee that the apparent trend toward agricultural free trade is showing alarming signs of reversing itself.
Jack Roney, director of economics and policy analysis for the American Sugar Alliance (ASA), said, “The multilateral Uruguay Round Agreement on Agriculture of 1995 and the more profound reforms of the 1996 Farm Bill in the United States seemed to presage a sea change: Governments removing themselves from the agricultural marketplace.”
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But, Roney said, “Developments since that time overwhelmingly suggest the opposite is occurring. Governments already heavily involved in their agricultural markets remain entrenched; many governments that had begun to remove themselves have reversed direction.”
Roney was providing sugar industry views at a hearing convened by Committee Chairman Larry Combest (R-TX) on current and future agricultural policy. The ASA is the national coalition of growers, processors, and refiners of sugarbeets, sugarcane, and corn for sweetener.
In describing the sugar industry’s hope for freer trade, Roney said: “Because of its competitiveness, with costs of production well below the world average, the U.S. sugar industry supports the goal of genuine, global free trade in sugar. American sugar farmers cannot compete with foreign governments, but we are perfectly willing to compete with foreign farmers in a truly free trade environment.”
Roney expressed concern, however, that recent developments suggest that free trade goal is more elusive than ever. “U.S. and world commodity prices plunged to historic lows in real terms the past two years. Governments have rushed back into the marketplace to protect farm prices, or income, or both, buttress their rural economies, and ensure domestic food supply stability. Efforts to initiate another multilateral round of reforms through the World Trade Organization collapsed. Bilateral or regional trade agreements have tended to exclude key agricultural products.”
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By GlobalDataRoney provided several examples. In the United States, despite the 1996 Farm Bill’s intention of “phasing out” commodity programs, spending has “exploded,” from $5 billion in 1996 to more than $32 billion this year. European and other traditionally protectionist countries’ agricultural subsidies remain entrenched. Many key sugar-producing countries claiming to be free trade oriented, such as Thailand, Mexico, and “the supposed free-trade paragon, Australia,” are coming to the aid of farmers in economic distress.
Roney listed several reasons for the intractability of agricultural policies: “Internationally, governments appear to be recognizing the unique value and sensitivities of their agricultural economies, and the economic and political dangers of deregulation. Agriculture is uniquely sensitive to weather, disease, and other natural disasters. Agricultural trade is uniquely distorted by the breadth and depth of entrenched government policies. Agriculture tends to be the primary, if not sole, employer in rural areas. And, agriculture provides a product unique in the public’s view of essential products — its basic food supply.”
Roney noted that, in part because of the crisis in the rest of American agriculture, the U.S. sugar industry is now in crisis. “The spillover of acreage from grains, oilseeds, and cotton to sugarbeets and sugarcane has increased sugar production, contributed to 20-year lows in U.S. sugar prices, and prompted the government to make unprecedented purchases of sugar to reduce the surplus. Though the cost of the purchases is minute relative to overall agricultural spending, U.S. sugar policy will register a net cost to the government for the first time in nearly two decades.”
Roney told the Committee the U.S. sugar industry would find a way to survive this crisis and that, until other governments relinquish policies that distort and depress the world sugar market, some minimal U.S. sugar policy must be retained.
For more information about U.S. sugar policy, visit www.sugaralliance.org
