Sweet Stockpile...!

There are so many things the governments of the world are stockpiling, it really makes you wonder sometimes.

It seems that whatever master plan some governments have can easily backfire and create some big problems instead of solving solving them. Here's a good example.

Sugar

The world’s sugar stockpiles are so high and prices so low that it’s driving some sugarcane farmers in India to commit suicide. Even with higher demand and lower production for sugar, the surplus in the sugar market is expected to remain high through 2016. That keeps sugar prices low and farmers hurting financially. Ironically, a major cause is the government-subsidized stockpiles of 86 million tons of sugar that were supposed to prop up prices and raise incomes for farmers of sugar crops.

That strategy obviously backfired. Sugar prices have also been hurt by low oil prices, which reduced demand for ethanol, an alternative fuel which can be made from sugar crops. The US and China have had government stockpiles of sugar for years. In early 2015, India was debating whether a government-sponsored sugar stockpile would help its farmers weather the latest plunge in prices.

But government stockpiles often cause more problems than they solve. In late 2013, China considered phasing out its stockpile in favor of making direct payments to farmers. “We have this dilemma,” said Chinese official Zhao Lihua at a local conference. “The more the government stockpiles when local supply exceeds demand, the worse the oversupply becomes because we end up importing more.”

I will never understand just why the governments tend to stockpile certain things. Maybe we should look a little further into this practice, ya think?

Coffee out on the patio this morning, OK?