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July 13, 2017

Summer of Foreign Sugar Subsidies Continues

What’s a country to do when billions of dollars in handouts isn’t enough to defend its farmers from foreign producers who dump their subsidized sugar surpluses? Increase its barriers to block unfair imports, of course!

India is poised to do just that.

Reuters reports India is likely to raise the import tax on sugar to 50% from 40% in an effort to stop the flow of subsidized, dumped supplies from foreign competitors.

The import tax hike comes on the heels of billions in farm debt forgiveness—a tactic employed by India over the years, which usually follows low-interest or interest-free government backed loans to create a subsidy to growers.

In a note to its clients earlier this month, Bank of America Merrill Lynch predicted that India could forgive up to $40 billion in farm debt ahead of the 2019 elections, according to The Financial Times.  And that’s in addition to the $5.6 billion in debt India has already forgiven this year for 21 million farmers, according to CNN Money.

Then again, the new import barrier isn’t as high as India’s sugar industry wanted, so there’s room for a summer sequel if lobbying pressure mounts.

“The Indian Sugar Mills Association (ISMA) had previously cautioned that a sharp drop in global prices and a stronger Indian rupee made overseas purchases viable despite the 40% duty, calling for an increase to 60%,” Reuters wrote. Stronger currency values make subsidized imports an even bigger threat to domestic producers.

India’s latest action adds to the growing body of evidence supporting the need for stopping subsidized and dumped sugar worldwide.

U.S. sugar producers support this kind of subsidy-free, free-trade system. It’s known as the Zero-for-Zero sugar policy by U.S. Rep. Ted Yoho (R-FL). And under the plan, the no-cost U.S. sugar policy would be rolled back in exchange for the elimination of foreign subsidy programs that prop up inefficient producers who dump subsidized sugar into the global market.

But until that happens, unilateral disarmament of America’s no-cost sugar policy would only jeopardize U.S. jobs while rewarding nations like India for gaming the system and manipulating the market.


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