Brazil sugar subsidies at high tide

Published online: Jul 21, 2013
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If you're having a hard time keeping up with subsidy news coming out of Brazil, you're not alone.

On a near weekly basis, the Brazilians are announcing special deals to help its sugar producers expand their already OPEC-like stranglehold on the world sugar market.
 
Here's a recap of what has recently transpired.
  • A months-long research project into Brazil's intricate web of market-manipulating policies turned up a minimum of $2.5 billion a year in sugar subsidies that are having a profound effect on global prices.
     
  • Brazil admitted to the World Trade Organization that it has doubled subsidies in the past three years.
     
  • Brazil announced a new $480 million bailout package for its sugarcane ethanol industry.
     
  • Brazil announced an additional $65.2 million in new subsidy checks to sugarcane growers.
     
  • Brazil announced a 20% increase in agriculture spending for 2013/14, bringing the total ag subsidy pot to $64 billion - a six-fold increase over the past decade.
     
  • Brazil announced plans to vote on a bill to reduce constraints on planting of sugarcane in the Amazon region, prompting concerns about further deforestation.
Meanwhile, as the United States Congress debates the Farm Bill, some are advocating that America gut its sugar policy - which has operated at no taxpayer cost for the past decade - and hand over the domestic market to subsidized exporters like Brazil.
 
Luckily, the U.S. Senate just rejected an anti-sugar amendment - making it the third time in the past two years similar legislation has been defeated in the Senate. 
 
Now, the sugar policy fight moves to the House and some are starting to call for a new common-sense "zero-for-zero" strategy that opposes unilateral disarmament until subsidies from exporters like Brazil and others can be eradicated.
 
As one conservative blogger recently described it:
 
Simply put, what we must engage in is a radical de-escalation of the trade war. What we should be doing is actively working to level the playing field between us and our trade partners-telling them that we will remove our tariffs once (and only) when they stop heavily subsidizing their industries.. Removing barriers, all of them, is the only thing that is truly fair, and makes the most sense.
 
Well said. That's why House members should reject all anti-sugar amendments.

Source: asa