OECD Report: Global Subsidies Distort Markets, Hinder Sustainability

The Organisation for Economic Co-operation and Development (OECD) recently released their Agricultural Policy Monitoring and Evaluation 2019 report. Covering nearly 500 pages, this report shines a spotlight on the agricultural policies of 53 countries across the globe.

Their policy experts came to a conclusion that the American sugar industry has known for a long time: government subsidies drive market distortions.

In fact, Dr. Darren Hudson, director of Texas Tech’s International Center for Agricultural Competitiveness, recently authored a study of global sugar subsidies and found that sugar is one of the world’s most distorted commodity markets.

“Government intervention in the world sugar market remains extreme and widespread with a wide variety of measures to support domestic sugar producers,” read Dr. Hudson’s report.

Unfortunately, the OECD found that not only are these agricultural policies inefficient and harmful to producers, consumers and taxpayers, they also hinder progress towards sustainability.

They wrote:

A key element to meeting future challenges is to remove most distorting forms of support that undermine efforts to improve agricultural productivity and sustainability…

The continued reliance of many countries on [distorting forms of] support… prevents producers from responding to market signal and hence from employing natural resources, investments and other production inputs in the most efficient and sustainable way.

America’s sugar producers have invested in sustainability for decades. With a drive toward conservation while keeping a focus on the community that is the heart of our industry, we continue to make strides to benefit both the workplace and the environment.

This stands in stark contrast to the global sugar subsidies that have created a 50-million-metric-ton global surplus, driven prices below the cost of production, and set into motion a vicious cycle of government intervention that rewards bad actors.

Ultimately, the OECD recommends that governments dismantle trade-distorting policies in order to allow markets to function efficiently.
Governments need to roll back distortive, inefficient and environmentally harmful support and put emphasis on high-return policy interventions and the enabling environment for a productive, sustainable, and resilient agri-food sector.

We couldn’t agree more. Only a Zero-for-Zero sugar policy will establish a true free market in sugar – one that encourages innovation and rewards efficient producers.

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