Friday, May 27, 2022

World sugar export troubles creates unique opportunity

While I have some sympathy with the thoughts below, I think he is misinformed. I think that subsidies to sugar marketing are a problem, but the big problem remains that the cost of production is much less in the tropics than anywhere in the USA.

Sugarcane is a tropical crop. It is a huge, fast-growing grass that is full of sugar. You just have to crush it and sugary water flows out of it. The American custom of getting sugar out of corn is much harder and more costly.

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And there is never likely to be any shortage of sugar. Sugarcane is grown up and down the long East coast of tropical and subtropical Australia and, because sugarcane grows so quickly that could be greatly expanded almost overnight.

There is no doubt that American sugar would vanish overnight without political protection. And unsubsidized sugar from Australia and elsewhere would rapidly fill the gap. Australia did once subsidize its sugar exports but that is long gone. So the economically rational way forward for America would simply be to drop its subsidies and insist that any sugar imported must be unsubsidized.

Sadly, under such a system American sugar production would cease. And the uproar from existing American sugar producers would be huge. Change would therefore almost certainly be politically too difficult

Rick Manning

For years major U.S. domestic sugar users like the candy industry, have pushed for the elimination of the U.S. government sugar price support system with the goal of flooding the market with sugar from around the world.

Now Americans should realize why this was a spectacularly bad idea absent mutual agreements to end subsidies for major producers. India, the second largest exporter of sugar, has just announced that they are capping the amount of sugar they will export partially due to food shortage concerns.

This follows announcements coming out of Brazil, that the world’s largest sugar exporter is cancelling sugar export contracts, diverting their sugar cane to ethanol production. The Brazilian decision is driven by high energy prices, altering the amount of sugar available on the world market.

The good news is that U.S. sugar production remains strong, but the bad news is that in 2020, the U.S. accounted for 8.3 percent of the world’s sugar imports, about one–third of the total consumed in the States.

If not for robust American sugar production, the costs of foodstuffs containing the natural sweetener in our country would be skyrocketing, proving the value of not putting sugar market at the mercy of heavily subsidized foreign sugar exporters.

Interestingly, the limitations and retrenching of some of the world’s largest sugar producers creates a unique opportunity for the Biden administration to restore honesty to the international sugar market.

It is much easier to convince countries to end their sugar subsidies in an environment where they are restricting or ending balance of trade enhancing exports, than in the face of rapidly expanding subsidized export policies, and this provides the opening that many in favor of ending sugar subsidies intelligently have been waiting to occur.

Congressmen Dale Kildee (D-Mich.) and Kat Cammack (R-Fla.) have legislation which, if passed, would trigger a process for the U.S. government to end the domestic sugar program once the president certifies that major sugar exporting trade partners have agreed to end their price distorting subsidies.

Called Zero for Zero, the resolution has never been more pertinent as the choices being made by the top two sugar exporters provide an open door to negotiating away their subsidies.

Every American knows that systems seem to be breaking everywhere without any rational explanation. In the case of this one agriculture program, the global supply chain shock may just provide the foundation for ending it.

Wouldn’t that be refreshing if the calamitous Joe Biden term of office led to achieving one of American conservatives long-held goals – ending the sugar program and creating a level playing field for American farmers to compete.


Canadians going hungry?

On the cusp of summer, the cold, hard edge of hunger is hitting North America. At a time when experts are warning about global food shortages, a new report from Canada says individuals living on government benefits are being forced to live with less.

Stephen Jones, 56, told the Toronto Globe and Mail that Canada’s inflation has forced him to change his shopping habits with an eye on price. Sometimes, even that is not enough.

“Sometimes, by the end of the month, before we’re getting to the due date for the money, I’m down to maybe just a very small meal once a day,” he said, according to the newspaper.

“I am almost on the verge of having to skip meals altogether in a day,” he said.

Jones is living on $1,200 a month in disability benefits (about $940 in U.S. currency), which have supported him for the past 15 years after he had to give up his career in finance due to debilitating depression. But times have changed.

Although at 6.8 percent, Canada’s April inflation rate trailed the 8.3 percent rate of the United States under the Biden administration, it was a 31-year high. Grocery prices rose 10 percent year over year; the highest spike since 1981, the Globe and Mail reported.

Toronto’s Daily Bread Food Bank, had about 160,0000 visits in March, a record high and a 134 percent increase compared to pre-pandemic levels, according to the newspaper.

“People have gotten to the end of their savings, they’re going into debt,” Neil Hetherington, chief executive officer at Daily Bread said, told the Globe and Mail. “And so they’re going to be turning to food banks even more.”

Jones knows his day will come. “I know that these places are very accommodating and non-judgmental, but there’s an element of shame in doing that,” he told the newspaper. “But at some point, yes, I am definitely going to have to go to a food bank,” he said.

Canadian agriculture expert Kim McConnell, of Okotoks, told Edmonton Journal columnist David Staples in April that many other Canadians are likely to find themselves in the same position. “There’s going to be a lot of hungry people,” she said.

Another expert, Valerie Tarasuk, a professor of nutritional sciences at the University of Toronto, told the Canadian Television Network last week that more and more of the country is likely to face food insecurity.

“As prices of basic commodities rise, it’s very worrisome to think that we have such a large swath of the Canadian population sitting in circumstances are insufficient to come up with the costs,” Tarasuk said.


Are the Democrats losing silicon valley?

Barack Obama’s White House hosted so many Google executives that it was seen as a satellite office. The company’s chairman Eric Schmidt campaigned vocally for Obama’s election, and during Obama’s eight years in power, a Google employee visited the White House on average once a week.

Democrat ties to Silicon Valley did not stop at a single company. Sheryl Sandberg, Facebook’s number two, worked for the Clinton administration. Obama’s political strategist David Plouffe went on to work for Uber and Mark Zuckerberg’s charitable foundation. The former president’s press secretary, Jay Carney, is now a senior executive at Amazon.

Elon Musk’s Tesla survived in its early days partly through hundreds of millions of dollars of Obama-era loans.

But in recent months, the once-strong ties between US Democrats and Silicon Valley, the new heart of American corporate power, have broken down. In the last week, the tech industry’s two wealthiest individuals have attacked Joe Biden’s party, while a growing number of senior figures have questioned the administration.

“In the past I voted Democrat, because they were (mostly) the kindness party,” Musk tweeted on Wednesday. “But they have become the party of division & hate, so I can no longer support them and will vote Republican.”

Earlier this month, Amazon founder Jeff Bezos launched a rare political intervention, attacking Biden over his record on inflation. In response to Biden calling for higher taxes on corporations to fight price rises, Bezos accused the US president of “misdirection”.

“Inflation is a regressive tax that most hurts the least affluent,” he added.

For years, Silicon Valley and its workers appeared to be natural allies of the US Left. The web’s pioneers boasted of libertarian ideals and the end of censorship, an antidote to conservative fears over violent video games and rap music that paralleled its rise. Its workers were primarily young, university-educated and socially liberal.

Santa Clara County, the home of Apple, Google and Facebook, voted for Republicans Richard Nixon, Gerald Ford and Ronald Reagan, but has swung blue in every presidential race since 1988.

It became a mutually beneficial relationship. For Democrats, Silicon Valley was the acceptable face of capitalism, mission-driven, vibrant and diverse, not to mention a huge source of funds. Silicon Valley donations to Obama in 2012 outpaced those to Mitt Romney roughly tenfold. In turn, the Clinton and Obama administrations brought light-touch regulation, such as the Section 230 protections that broadly granted legal immunity to social networks. In 2012, the Obama administration decided not to bring monopoly abuse charges against Google, and waved through acquisitions such as Facebook’s takeover of Instagram.

Tech’s Right-wing only occasionally stuck their head above the parapet. Former eBay boss Meg Whitman unsuccessfully ran for California governor as a Republican in 2010. When Peter Thiel, a PayPal founder and early Facebook investor, spoke in support of Donald Trump at 2016’s Republican National Convention, he became a pariah to much of the tech industry.

The Biden White House has been more hostile to tech companies and their owners, however. Biden has accused companies such as Facebook of “killing people” for not regulating Covid posts more strictly. He has also appointed a string of senior officials who have called for Big Tech to be broken up, such as Tim Wu and Lina Khan, two stars of the antitrust movement.

Biden has also strongly supported unions, putting him in conflict with the likes of Amazon and Tesla. The Tesla billionaire has also grumbled at Biden’s apparent reluctance to credit his company with driving the electric vehicle revolution, while heaping praise on Ford and General Motors.

In contrast, Trump cut taxes on the huge stashes of overseas funds that Apple, Google and Microsoft held, which were returned to grateful shareholders.

But it is Democrats’ tax policies that have caused the biggest stir among Silicon Valley’s wealthiest. Last year, US senators Ron Wyden and Elizabeth Warren proposed taxing the richest 700 Americans on their unrealised gains, such as the soaring value of their shares. The plan was scuppered by moderate Democrats but earned Musk’s ire.

“Eventually, they run out of other people’s money and then they come for you,” he wrote in October. Later, he sold 10 per cent of his Tesla shares, resulting in a tax bill of about $US11 billion. “I’m paying the largest amount of tax of any individual in history,” he said.

Zach Graves, executive director of the Lincoln Network, a technology policy group, says: “There has always been a libertarian kind of flair in Silicon Valley, but sometimes that’s been more underground. They don’t wear it on their sleeve. The convention that Silicon Valley leans pretty strongly to the Left is right. But you do see notable exceptions.

“People have become more successful, maybe they have had their exit [a major payday such as an IPO]. They feel more comfortable in their political views.”

A string of top Silicon Valley investors such as Paul Graham, the Welsh born founder of Y Combinator, and Marc Andreessen, the head of one of Silicon Valley’s top venture firms A16Z, have become more outspoken about Left-wing censorship.

“It used to be that censorship was something the Right did, and free speech was something the Left were in favour of. But over the last few decades, banning ‘problematic’ ideas has become a huge component of Left culture,” Graham wrote last month.




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