Big Sugar's Sweet Deal Leaves a Bitter Economic Aftertaste
Senator Lugar has set his sights on repealing one of Washington’s most indefensible programs—the sugar baron welfare program. This week, Lugar introduced the “Free Sugar Act of 2011,” designed to repeal the sugar program that has kept sugar prices artificially high through price manipulation, import quotas, and tariffs.
If on any given day you find yourself walking through the hallowed halls of ATR, you will find the staff pining away for the sweet taste of “Mexican Coca-Cola” or any other bottle of Coke not produced in the U.S. and thus not tainted with sticky un-refreshing taste of corn syrup. The reason for the difference lies in the U.S. Government’s efforts to keep sugar prices artificially high by restricting the amount of sugar that can be imported to the U.S. This results in the price of sugar in the U.S. being one-half to two-thirds higher than in other countries and thus too expensive to use in domestically produced Coke products.
This policy is not only bad for American taste buds, but also American consumers. As stated in a letter sent by ATR in support of Lugar’s legislation, the program has worked to the advantage of a few farmers (the largest 1% of growers claimed 42% of the program’s benefits) and to the expense of the rest (the General Accounting Office estimated that the program cost sugar consumers a grand total of $2 billion annually at the point of purchase).
Additionally, the U.S. International Trade Administration estimates that for every job held up by the program, three jobs are lost as manufacturers in the confectioner industry move their facilities to countries such as Canada and Mexico where sugar is cheaper.
In an op-ed for the Washington Times, Sen. Lugar sums up the program pretty nicely:
“A complicated system of marketing allotments, price supports, purchase guarantees, quotas and tariffs that only a Soviet apparatchik could love, the U.S. sugar program has actually lasted longer than the Soviet Union itself.
“It imposes a hidden tax of billions of dollars annually on consumers and businesses and has destroyed thousands of U.S. manufacturing jobs. It substitutes the federal government for the private sector in basic decisions about buying and selling, supply and price.”
Its time to get the government out of the sugar business and let the market determine the cost of sugar.