Sugar — Congress’ Favorite Sweetener

Great post by Fran Smith of the Competitive Enterprise Institute Blog.

"The sugar lobby’s sweet contributions and their day-in-day-out lobbying means broad bipartisan support for continuing the U.S. sugar program in the 2013 farm bill, as The Washington Post noted in a wide-ranging article December 7. Sugar policy, consisting of price supports, restraints on domestic supply, and import controls, benefits mainly a small number of rich sugar producers at the expense of consumers and taxpayers, according to the article.

Historically, the program has resulted in domestic sugar prices substantially higher than the world price. Besides those sweet deals, the government also buys back sugar producers’ surplus so they don’t have to pay back federal loans. Then the U.S. Department of Agriculture sells that sugar to ethanol producers at a loss.

Numerous attempts have been made to rein in this egregious program, but the sugar industry’s intense and consistent lobbying and the huge contributions they make on both sides of the aisle almost guarantee them the program’s continuation.

The cost to consumers hits them in the pocketbook, as sugar is an ingredient in not just sweet treats, but in staples such as bread and processed food. The sugar program means about $3.5 billion in additional costs to consumers per year.

It’s estimated that the higher domestic prices for sugar has cost the confectionery, beverage, and food industries nearly 127,000 jobs between 1997 and 2011, according to the U.S. Department of Commerce, and has led to many candy companies moving their operations to other countries, such as Mexico and Canada. For every job saved in the sugar producing industry through the sugar program, about three jobs are lost in the confectionery and food industries, says Commerce.

As CEI noted in a coalition letter to the House and the Senate:

The U.S. sugar program is a classic public choice case of concentrated benefits and dispersed costs: of how special interests can trump the public interest. A small number of sugar producers receive enormous benefits, while the costs are spread across the U.S. economy, hitting consumers and the sweetener-using industries."