Americans for Tax Reform (ATR) today sent a letter to members of Congress that was signed by eight other organizations, urging lawmakers to include efforts to reform the U.S. Sugar Program in the end of year spending bill. The current U.S. Sugar Program was introduced in 1934 with the goal of lowering sugar production and raising sugar prices. Unfortunately for American consumers, businesses, and taxpayers, the sugar program has achieved its intended goal all too well.
The result has been a system of protectionist policies that solely benefit the sugar industry at the expense of American consumers and taxpayers. Since 1934, the U.S. Sugar Program has evolved into a thicket of government imposed price supports, import quotas, and tariffs that keep domestic sugar prices artificially high. These sweetheart deals for “Big Sugar” are costing taxpayers and consumers billions, while impacting the economy and fostering a climate of crony capitalism that rivals that of the Ex-Im Bank. The time has come for lawmakers to reexamine what is actually being accomplished by this corporate welfare scheme. Below is the full text of the letter:
We, the undersigned organizations, respectively urge you to take steps to begin reforming federal sugar policy this year. The House missed an opportunity to address this programmatic dinosaur in the Agricultural Act of 2014 when a number of other farm programs were significantly reformed. The consumers, businesses, and taxpayers of this nation deserve prompt action to begin bringing the sugar program toward a more market-oriented structure.
The current sugar program relies upon total control of the domestic market and administration of that market by federal officials to force consumer prices to rise to an artificial level unrelated to world market prices. A recent study by economists from Iowa State University estimated that the sugar program costs U.S. consumers up to $3.5 billion per year more for sugar than the market justifies.
Good paying manufacturing jobs are being lost in the industries that use sugar as a major ingredient in their products. Our nation has lost more than 120,000 such jobs from 1997 to 2011 while at the same time employment in the other parts of the food industry have increased. This is not due to a decrease in consumption of sugar-containing foods. It is simply a case of moving the manufacturing offshore.
In addition to controlling the supply of sugar, federal law provides unlimited nonrecourse loans to the processors of sugar to guarantee a minimum price for sugar. This handful of processors can take out loans on all the sugar they process, which can run into hundreds of millions of dollars for a single entity. The ink was hardly dry on the last Farm Bill when a series of massive loan forfeitures cost taxpayers $259 million.
Mr. Speaker, the sugar program is a long-neglected corner of federal policy that demands Congressional attention. The U.S. sugar industry operates in a market virtually off limits to foreign competition. As a result, prices for refined sugar averaged nearly 80 percent higher than world prices for the most recent ten years. The federal sugar loan program is the only crop commodity program that makes unlimited nonrecourse loans to processors. In all other crop commodity programs, benefits are limited by the size of the entity or the amount of the benefit, but not for sugar.
We believe that it is long past time to begin the process of removing this significant burden from consumers’ wallets and ending the special privileged status of the handful of domestic sugar processors. We urge you to include provisions in this year’s federal funding legislation to begin curbing the excesses of the sugar program.
Americans for Tax Reform
U.S. Chamber of Commerce
Council for Citizens Against Government Waste
Competitive Enterprise Institute
Consumer Federation of America
National Consumers League
Taxpayers Protection Alliance
Taxpayers for Common Sense
Center for Individual Freedom
Photo Credit: Logan Brumm