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 are five reasons the sugar program is quite literally all cost and no benefit for Americans.
1. The sugar program has cost taxpayers billions. For American taxpayers, the sugar program has led to billions of their hard earned dollars being wasted propping up the sugar industry. Estimates show that from 2000-2001 the sugar program cost taxpayers almost half a billion dollars. In 2013 nearly $300 million was charged to taxpayers by the program, and the Congressional Budget Office (CBO) projects the program will cost taxpayers an additional $115 million over the next 10 years.
2. Consumers pay the price for sugar subsidies. As a result of the sugar program, the average wholesale price of domestically produced sugar in the U.S. is more than twice the average world price of sugar, an average of 14.87 cents higher per pound. For instance in August of 2015 the U.S. sugar price of 33.13 cents per pound was more than double that of the world price of 15.57 cents. This means that American consumers are not only footing the bill for these government backed handouts to big sugar, but are being made to pay higher prices for sugar and related goods as a result.
3. Sugar subsidies are crony capitalism at its worst. Much like the beleaguered Ex-Im Bank, the U.S. sugar program is the antithesis of free-market policy. The program instead represents the worst of corporate welfare and cronyism that so often plagues D.C. politics. Through the use of price supports, import quotas and tariffs, the sugar program destroys competition in the market, protecting the politically connected sugar industry at the expense of hard working Americans.
4. The sugar program is destroying thousands of U.S. jobs annually. Protectionist policies under the U.S. sugar program have led to artificially high prices for domestic sugar, creating incentives for manufacturers to import certain sugar products or to relocate their operations outside of the U.S. As a result, the sugar program has led to a loss of nearly 10,000 jobs annually in the U.S. food industry. The Department of Commerce (DOC) estimates that for every sugar-growing job saved through high U.S. sugar prices, approximately three manufacturing jobs are lost.
5. Sugar handouts distort the market and harm domestic businesses. The current U.S. sugar program uses protectionist policies to prop up the sugar producing industry, insulating producers from market forces and most importantly competition. While artificially high prices and restricted competition is good for sugar producers, domestic sugar-using manufacturers alternatively are competing globally but paying for domestic sugar at a rate twice that of the global price, putting them at a severe disadvantage.
Photo credit: Moyan Brenn