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Tuesday, December 12, 2017

US Sugar Policy Is Propping Up Modern-Day Plantations

Americans can’t put up with Big Sugar’s crony methods any longer.

If you’re like me and are trying to eat well in preparation for holiday indulgence, you know how difficult it is to truly avoid sugar. It is simply a part of the American diet, present in not just sweets but everything from bread to spaghetti sauce. For its seeming ubiquity, you might think sugar comes at a low price. But for taxpayers, that sweetness doesn’t come cheap.

For decades, domestic sugar producers have been protected from fair competition. In recent years, their influential lobby has ensured producers’ inflated profits through $260 million worth of federal subsidies and restrictions on fairly priced imported sugar. That’s why a bipartisan group of 64 senators and representatives as diverse as John McCain and Elizabeth Warren are co-sponsoring the Sugar Policy Modernization Act, which aims to introduce market reforms into the industry and bring our outdated, Depression-era sugar policy into the 21st century.

The US sugar program works to “enrich a handful of well-connected plantation owners.” These modernizations are long overdue. These payments to special interests, on which the industry has long relied, will cost taxpayers $138 million over the next decade, according to a 2016 report by the Congressional Budget Office. Worse, these handouts rarely accrue to anyone but the industry’s largest and most well-connected players.

According to Congressman Danny Davis, D-Ill., a co-sponsor of the Sugar Policy Modernization Act, the US sugar program works to “enrich a handful of well-connected plantation owners.” The National Confectioners’ Association, a trade group, agrees, reporting that “the benefits of sugar subsidies and protections go directly to just 14 sugar beet and sugarcane producers in a few states.”

The payments doled out to a select few under this crony sugar program endanger jobs that depend on a supply of sugar priced near global averages. Unfortunately for manufacturers, price supports and import restrictions on sugar have led to domestic prices significantly higher than elsewhere around the globe.

These inflated prices disrupt domestic supply chains, threatening thousands of well-paying American manufacturing jobs, all while nibbling away at American taxpayers’ wallets. All told, economist Mark Perry of the University of Michigan estimates that the sugar program costs American businesses and consumers more than $3 billion every year.

The sugar program costs American businesses and consumers more than $3 billion every year. That’s a steep price to pay, and all Americans get for it is the propping up of politically connected sugar producers. But the cost of special-interest lobbying in the sugar industry is felt most heavily by US workers laid off by companies that have been forced to move abroad, where sugar prices are cheaper.

A 2006 report by the US International Trade Administration found that as many as 10,000 American jobs were lost as confectioners such as Hershey Co. and Lifesavers were forced by government-inflated domestic sugar prices to move plants out of the US. The same report found that the many jobs lost on account of federal intervention in sugar production far outweigh the few jobs saved for growers. In fact, it found that “for each one sugar growing and harvesting job saved through high US sugar prices, nearly three confectionery manufacturing jobs are lost.”

Americans can’t put up with Big Sugar’s crony methods any longer. Congresswoman Virginia Foxx, R-N.C., agrees, stating that, “Our nation’s antiquated sugar program seeks to prop up prices for the sugar industry at every turn, sticking consumers with the bill.” But common sense legislation that sets American workers and consumers first, like the Sugar Policy Modernization Act, might just get the bitter taste of crony capitalism out of our mouths.

Of course, Congress has many important matters to consider before the end of the year. But perhaps lawmakers can come together to give Americans a sweet treat, just in time for the holiday season.

Reprinted from the Washington Examiner.

  • Ted Ellis lives in Washington DC, where he works policy analyst on foreign policy and trade. He is a graduate of Roanoke College.