31 st Annual International Sweetener Symposium Stowe, Vermont August 4, 2014

1. 31st Annual International Sweetener SymposiumStowe, VermontAugust 4, 2014 Sugar Sector Challenges Jack Roney Director of Economics and Policy Analysis, American Sugar Alliance Washington, D.C.

2. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Threats to U.S. sugar production • 30 years of mostly flat prices and sharply rising input costs has shrunk the industry; more closures possible = less supply certainty • Market uncertainty, wide price fluctuations, low prices and governments costs for sugar policy • Defending efficient U.S. producers in the face of predatory foreign subsidies • Threats to U.S. sugar consumption • Misguided guidelines, labeling laws • Consumer confusion regarding sugar safety, nutrition • Areas of common cause • Defending consumption, USDA reporting, ISO, free trade

11. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Threats to U.S. sugar production • Market uncertainty, wide price fluctuations, low prices and governments costs for sugar policy • The overwhelming cause of U.S. sugar market uncertainty: MEXICO

19. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Threats to U.S. sugar production • Market uncertainty, wide price fluctuations, low prices and governments costs for sugar policy • The overwhelming cause of U.S. sugar market uncertainty: MEXICO • Uncertain, excessive exports of dumped, subsidized sugar • 20% of Mexican industry owned, operated by Mexican government • Soaring share of U.S. sugar consumption • Not exporting to world market as promised • Importing from world dump market to backfill exports to U.S. market

20. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Threats to U.S. sugar production • Market uncertainty, wide price fluctuations, low prices and governments costs for sugar policy • The overwhelming cause of U.S. sugar market uncertainty: MEXICO • U.S. filing of anti-dumping and countervailing duty cases: Should restore fair trade and, therefore, stability, predictability to U.S.-Mexican sugar market; avoid any further U.S. government sugar policy costs • ITC preliminary determination: Voted 5-0 that dumped and subsidized imports from Mexico are causing material injury to U.S. growers and processors, rejecting Mexican government and industry and U.S. Sweetener User arguments (Sugar from Mexico, USITC Publication 4467, May 2014).”

21. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Threats to U.S. sugar production • Defending efficient U.S. producers in the face of predatory foreign subsidies • World market remains distorted

25. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Threats to U.S. sugar production • Defending efficient U.S. producers in the face of predatory foreign subsidies • World market remains distorted • Dismantling U.S. sugar policy while foreign subsidies rampant = unilateral disarmament • Loss of American jobs to foreign subsidizers • Threat of less safe, lower quality, less dependable foreign sugar, probably at higher prices • Seek support zero-for-zero approach: U.S. will eliminate its sugar policy when major producers/consumers eliminate theirs

26. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Threats to U.S. sugar consumption • Misguided guidelines, labeling laws • Consumer confusion regarding sugar safety, nutrition • Absurd notion that rising sugar consumption is a major cause of rising U.S. obesity rates

31. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Threats to U.S. sugar consumption • Misguided guidelines, labeling laws • Consumer confusion regarding sugar safety, nutrition • Absurd notion that rising sugar consumption is a major cause of rising U.S. obesity rates • In fact, U.S. per capita sugar consumption is down 34% since its peak in 1972 • In fact, sugar and sweeteners’ share of U.S. calorie consumption is down 9% since 1970

32. Sugar Sector Challenges Common Concerns of Sugar Producers and Users: • Areas of common cause • Defending sugar and sweetened-product consumption • Addressing consumer misperceptions • Defending, improving USDA sugar outlook data for U.S. and Mexico • Maintaining USDA sugar expertise and reporting levels; encouraging most productive interaction among expert analysts • U.S. rejoining the International Sugar Organization • As instructed by Congress in 2008 and 2014 Farm Bill and as favored by both ASA and Sweetener Users: Valuable data sharing • Striving for genuine global free trade in sugar • Seeking Users’ support for zero-for-zero approach

33. Sugar Sector Challenges Summary • Threats to U.S. sugar production • Producing industry severely threatened by low prices, market uncertainty: Further decline = harm to Users, consumers as well • 2014 Farm Bill and AD/CVD cases major steps toward restoring some order, certainty, opportunity to cover rising production costs • Threats to U.S. sugar consumption • Work throughout sugar sector to address consumer misperceptions regarding sugar consumption, safety, nutrition • Areas of common cause • Cooperate on nutrition issues, USDA reporting on sugar, ISO membership, possibly global sugar free trade