Europe's Bitter Predicament
A Sept. 13 column by National Journal contributor, Jerry Hagstrom, described how an often-dismissed argument made by U.S. farmers in support of farm policies is actually playing out in Europe—a situation that Hagstrom calls a "cautionary tale" for Americans.
The argument in question goes something like this: "If you like the way the United States has become dependent on foreign oil, you'll love being dependent on foreign food." It is meant to underscore the important role the U.S. government and all Americans have in maintaining and protecting domestic food, fuel, and fiber production.
But opponents of U.S. farm policies and development economists have often scoffed at that notion, instead wanting the country to "specialize in manufacturing and services, and to import more food from countries where production and labor costs are lower," Hagstrom wrote.
In fact, bills have been introduced in Congress to essentially eliminate production of sugar in the United States in favor of foreign imports—the very scenario that has Europe reeling right now.
In 2005, the European Union (EU) overhauled its sugar policy, sharply cutting back domestic production and increasing its reliance on imports.
Now six years later, Europe doesn't have enough sugar to meet its demand because the foreign countries the EU was depending on are not delivering the needed sugar quantities.
Reuters even reported in June, "Some German retailers are limiting the amount of sugar that customers can buy to 4 kilogrammes per purchase due to a shortage." That's called rationing, and it should bring back a lot of bad memories for America.
We didn't have much of a domestic sugar industry back in 1942, and when World War II started, our foreign suppliers left us high and dry. That event was one reason the U.S. government has put such an emphasis on domestic food production.
Retired Army General Wesley Clark, a former presidential candidate and Supreme Allied Commander of NATO, wrote in a February article about food rationing: "I am no farm policy expert, but I know about national security, and I know that farmers are as important today as they were in 1942. As a new Congress debates America's future…they should think of the 210,000 farms that produce 80 percent of the country's agricultural output as a thin green line standing between prosperity and disaster."
Patrick Chatenay, a London-based agricultural consultant who has worked closely with EU sugar producers, agrees.
"The dismantling of EU sugar policy held unexpected consequences, one of which was to dramatically increase supply uncertainty and price fluctuations," he said. "Sugar is a vital ingredient in the food supply and in key biochemical processes, and to hand over control of its supply to foreign nations isn't wise. As seen in the very recent past, food commodity export bans do happen."
Since the EU sugar policy change, just 18 of the EU's 27 member states have continued to produce sugar, down from 23 in 2005, according to a July 8 International Sugar Journal article. Only France, Denmark, the Czech Republic, and Benelux are still producing a surplus, the article noted, and the resulting concentrated industry in the EU has left some of the 18 states producing just half the amount of sugar as before.
The problems surfacing in the EU probably wouldn't surprise McKeany-Flavell Company of Oakland, California. The commodity research firm, which provides counsel to U.S. food manufacturers and sugar producers, predicted a dire fate for U.S. food companies if imports replaced domestic production.
Volatile prices, inconsistent quality, and delivery issues would result if the domestic food industry had to depend on foreign sugar, their 2009 study concluded.
All those headaches, and we're only talking about one commodity. Imagine the fallout—food insecurity, job loss, rural economies drying up—if the farm policy opponents and development economists that Hagstrom described got their wish.
The EU doesn't have to imagine, which might explain why sugar officials there are urging us not to make the same mistake.
 
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