What’s up Sandhusker?
Yesterday Secretary Johanns was on C-span talking about policy positions of the USDA in the upcoming Farm Bill. I could not believe what I heard him say regarding another agriculture commodity, sugar. It is absolute lunacy.
For those of you who do not know about the sugar industry, Congress has set up a program of price stabilization that comes strictly from the limiting of the supply of sugar on the domestic market. By limiting the supply of sugar on the domestic market via limited import quotas and quotas on domestic sugar production, they increase the price for the domestic market that is above the world price equilibrium. The world price of sugar is based on a thinner market. It is often erratic and affected greatly by the dumping of sugar on the world market by other countries. The quota policy takes the beta or the variability (price risk) from a world market price dominated by the aforementioned factors and to a more stable domestic limited supply /and demand. The U.S. domestic price is generally higher than the world market price but it is so in many other countries in Europe who have the same goals for sugar production in their countries. Sugar, after WWII, was considered a strategic commodity and domestic production was protected by this policy for strategic reasons.
This policy was also continued partly in response to trading with countries friendly to U.S. strategic interest and excluding one of the large producers of sugar on the world market, Cuba.
As a side note, the sugar industry has been hurt in terms of market share because of this policy, notably from competition of fructose from corn, but price stability has been achieved for the most part for sugar relative to the world price of sugar. This has kept many sugar producers in the business as other crops have had decreasing profitability. Amalgamated Sugar (a sugar beet processor) was bought out the farmers from a private holder not too long ago and so many farmers have an investment in the crop and the processing of the crop.
Now comes the Secretary of Agriculture. Yesterday in his articulation of USDA policy on sugar, he stated that the program would remain the same with one notable exception. In the past, if international imports exceeded a certain amount (and it conceivably be the case with Mexico under NAFTA), the domestic producers could sell their supply over their production quotas. Now the Secretary of Agriculture of the U.S. says that it will be administration policy to keep domestic quotas despite an over the quota limit by importers.
In the past, if domestic producers had extra supply, they had to sit on it or sell it on the world market. Now, if they have extra supply, countries like Mexico can go over the import quota and US producers still have to support the domestic price by keeping their quota.
With policies like these, why should we have a USDA? What function do they perform other than shafting domestic producers?
Sandhusker, he was your governor, what has happened to Johanns?
Yesterday Secretary Johanns was on C-span talking about policy positions of the USDA in the upcoming Farm Bill. I could not believe what I heard him say regarding another agriculture commodity, sugar. It is absolute lunacy.
For those of you who do not know about the sugar industry, Congress has set up a program of price stabilization that comes strictly from the limiting of the supply of sugar on the domestic market. By limiting the supply of sugar on the domestic market via limited import quotas and quotas on domestic sugar production, they increase the price for the domestic market that is above the world price equilibrium. The world price of sugar is based on a thinner market. It is often erratic and affected greatly by the dumping of sugar on the world market by other countries. The quota policy takes the beta or the variability (price risk) from a world market price dominated by the aforementioned factors and to a more stable domestic limited supply /and demand. The U.S. domestic price is generally higher than the world market price but it is so in many other countries in Europe who have the same goals for sugar production in their countries. Sugar, after WWII, was considered a strategic commodity and domestic production was protected by this policy for strategic reasons.
This policy was also continued partly in response to trading with countries friendly to U.S. strategic interest and excluding one of the large producers of sugar on the world market, Cuba.
As a side note, the sugar industry has been hurt in terms of market share because of this policy, notably from competition of fructose from corn, but price stability has been achieved for the most part for sugar relative to the world price of sugar. This has kept many sugar producers in the business as other crops have had decreasing profitability. Amalgamated Sugar (a sugar beet processor) was bought out the farmers from a private holder not too long ago and so many farmers have an investment in the crop and the processing of the crop.
Now comes the Secretary of Agriculture. Yesterday in his articulation of USDA policy on sugar, he stated that the program would remain the same with one notable exception. In the past, if international imports exceeded a certain amount (and it conceivably be the case with Mexico under NAFTA), the domestic producers could sell their supply over their production quotas. Now the Secretary of Agriculture of the U.S. says that it will be administration policy to keep domestic quotas despite an over the quota limit by importers.
In the past, if domestic producers had extra supply, they had to sit on it or sell it on the world market. Now, if they have extra supply, countries like Mexico can go over the import quota and US producers still have to support the domestic price by keeping their quota.
With policies like these, why should we have a USDA? What function do they perform other than shafting domestic producers?
Sandhusker, he was your governor, what has happened to Johanns?