U.S. Sugar Program Hurts Businesses and Kills Jobs

Great post by Daniel Rivera Greenwood of the Competitive Enterprise Institute Blog.

"CBS San Antonio affiliate KENS 5 reports that a San Antonio candy company, Judson-Atkinson Candy Company, has ceased operations after 110 years of making candy. The company has been forced to lay off more than 100 employees, and currently has only 14 people in its production facility. The family-run business says that the company simply can’t compete with firms outside the U.S., since domestic companies pay more for candies’ main ingredient: sugar. According to the owner of the company, Amy Atkinson Voltz, the candy company pays more than twice the international price for sugar, which caused an additional $2 million in costs for the company. “It’s totally unfair competition,” Atkinson said. “It’s been really hard. We had to bring in employees who had worked here 20-plus years and tell them that we were not going to produce candy right now.”

With the costly and unnecessary U.S. sugar program, it’s no surprise that American candy and beverage manufacturers have a hard time competing against international products from countries like Brazil and Mexico. While some domestic manufacturers are able to switch to alternative products like high fructose corn syrup, its application is limited in the candy manufacturing and baking industries.

The U.S. sugar program, part of the 2008 Farm Bill, is a policy that protects sugar producers at consumers’ and manufacturers’ expense. At the same time the program increases sugar expenditures by American consumers and manufacturers by about $2.4 billion, it adds $1.4 billion in extra income for sugar producers.

The costs go beyond businesses’ and consumers’ pockets. A U.S. Department of Commerce report found that from 1997 to 2009, more than 112,000 jobs were eliminated in the sugar containing industries. Supporters of the program claim that artificially inflating sugar prices supports jobs in the sugar producing sector. But, according to the same report, for every job in that sector, approximately three jobs are lost in the sugar containing industries. Unsurprisingly, there are around 600,000 sugar using jobs in the United States, as opposed to only 20,000 jobs in the sugar producing sector. Artificially propping up a few jobs with few beneficiaries at a larger group’s expense is inefficient and inexcusable.

In a time of high unemployment (9.1 percent in August), politicians should move to eliminate programs that increase the federal budget deficit and eliminate jobs. Companies like Judson-Atkinson, and larger ones like Hershey, are forced to close facilities or move them to other countries as a result of expensive sugar in the United States. And while labor cost differences are real and play a role in companies’ bottom line, artificially expensive inputs do not help United States’ competitiveness."