A Valentine’s Day Gift to Consumers: Dumping the U.S. Sugar Program

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Posted by James Morrone Jr on Friday, February 12th, 2016, 4:13 PM PERMALINK


Once a year millions of happy, and not so happy, couples use Valentine’s Day as an excuse to be romantically cliché and thoughtful to loved ones. A part of this annual custom is to buy little chocolates and candies to exchange, in addition to the obligatory bouquet of flowers of course. However, with each passing year the price of these delectable treats grows, and like the tip of Cupid’s arrow, rips a hole right through consumer’s wallets.

The common consensus, stores hike up the prices to meet demand. However this consensus for the most part is wrong, as the increasing price for candy is actually a result of Uncle Sam’s love affair with crony capitalism. For years protectionist policies under the U.S. Sugar Program have driven up the cost of sugar in an effort to protect a favored few sugar producers from competition.

Unfortunately, the U.S. Sugar Program is a relic of a past age that has somehow managed to stay alive in an ever globalizing and dynamic economy. This New Deal Dinosaur was originally put in place to quell a farmer’s revolt as the economy crashed in 1929. As time progressed, sugar producers got multiple protections like price supports, import quotas, incredibly generous subsidies, and a ridiculous program known as the “Feedstock Flexibility Program.” The Feedstock program forces the federal government to buy back unsold sugar from producers at a loss, adding insult to injury. 

Currently the average couple this Valentine’s Day is paying more for sugary goodness than they should be. As a result of the U.S. Sugar Program, there is a large differential between the wholesale costs of domestic sugar when compared to that of the world.  In fact, American sugar costs more than twice that of the world price of sugar. For instance in 2015 the price of sugar hovered around 33 cents per pound, while the world price was a mere 15 cents per pound

This kind of self-inflicted protectionism only does damage to consumers and the American companies that the make the sweets we love to consume. The prices have even forced a breakup between the U.S. and some in the confection industry. 

In fact over the last decade, 22% of candy making jobs have left the country in search of cheaper sugar. One of the more well-known American companies, LifeSavers, left the United States and moved to Canada to take advantage of cheaper sugar prices, taking with it over 600 jobs. 

Leave it to Uncle Sam to show just how much the federal government loves American taxpayers and consumers by the exorbitant amount of money they waste for our “benefit”, it’s really romantic. The reason being, according to a CBO report, that in the next ten years, the program will cost the taxpayer at least $115 million.  If the government were to dump this protectionist program, the average household would save at least $30 dollars per year.  More money to buy cheaper candy, a win-win by all accounts.

Not all relationships last forever, this is a truth we all know, so this relationship between consumers and government inflated sugar prices needs to end. It was good in the beginning, but times have changed and we need to move forward. It may be hard at first, but it will be better for both of us. It isn’t me, it’s you.    

 

Photo credit: Barb Steinacker

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