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What Horse Racing and the Global Sugar Market have in Common reported last week…

“Rep. Ted Yoho, R-Fla., reintroduced a bill Friday that encourages the administration to target foreign sugar subsidies. Under the ‘Zero-for-Zero’ plan, U.S. sugar policy would also be rolled back in exchange for the elimination of foreign programs, which Yoho says are distorting world prices and inhibiting a free market.”

House Concurrent Resolution 20 expresses the sense of Congress “that all direct and indirect subsidies that benefit the production or export of sugar by all major sugar producing and consuming countries should be eliminated.”

Citing the American Sugar Alliance, Agri-Pulse elaborated…

“The resolution specifically mentions subsidies in Brazil, Thailand, India, and Mexico. Increased subsidization by those countries since 2013 – including new export subsidies and debt forgiveness in India and bailouts for Brazil’s sugarcane ethanol industry – have sent global prices well below world average production costs.”

That last part is extremely important for policy makers, as critics of the current U.S. sugar policy regularly savage the market price of domestic sugar – which, by the way, is about the same as it was when Reagan was president, without even adjusting for inflation.

Critics of the U.S. sugar program maintain that the cost of domestically produced sugar is artificially high due to a set of import quotas and tariffs.  But in reality the price of foreign sugar is artificially low due to various direct government subsidies to sugar producers and exporters.

As such, Rep. Yoho’s resolution is spot on for free market capitalists, as a genuine free market must truly be free of government interference so that all parties are playing on a level playing field.  That’s not what we have today.

What we have today in the global sugar market is sort of a reverse-system of adding weight to successful horses in a horse race to give less successful horses a chance to win.  In the case of sugar, less successful producers are given extra financial assistance by their own governments in an effort to undercut American farmers.

While this kind of handicapping might be acceptable in horse racing, it is wholly inappropriate in the global agricultural market.  As such, the U.S. sugar program is nothing more than a counter-balance to foreign government efforts to tip the scales in their own favor.

The Yoho resolution essentially says that if they get rid of theirs, we’ll get rid of ours.  And anyone wanting a true global free market in sugar should support it.