Subsidies

Big Sugar Bailout: USDA to Buy 400,000 Tons of Sugar in a Bid to Make Your Snickers Bar More Expensive

|

sugar ad
Vintage ad

Here's a sad story: First the government loaned big sugar producers $862 million, secured with the 4 billion pounds of sugar the companies were expecting to produce this year. They did this under a 1934 law designed to allow the U.S. Department of Agriculture to prop up sugar prices. They do the same thing every. single. year.

But then there was a bumper crop of sugar beets and a strong sugarcane harvest. That means prices for sugar fell. But we can't have that! That might mean consumers could get cheap candy! 

So the government buys a lot of sugar in an effort to prop up prices—probably 400,000 pounds tons in this case—and then, by law, must sell it to ethanol producers. But ethanol producers don't really want it, so the government will have to (sorry!) sweeten the deal and sell it at a loss of about 10 cents per pound, or $80 million total.

Sure, this whole thing sounds cockamamie, but maybe it's worth it if the government can avoid a much bigger loss, right? Well, it probably can't, according to today's Wall Street Journal

The USDA is hoping to avert a repeat of 2000, the last time the agency bought sugar on the open market. The USDA bought 132,000 tons of sugar to raise prices, but the effort was generally considered unsuccessful because borrowers ended up handing over 1 million tons of sugar to the agency instead of repaying the loans.

The loan program incurred losses of $295 million that year.

Great. 

Meanwhile, American consumers already radically overpay for sugar and sugar-sweetened products thanks to import restrictions and taxes that prevent foreign producers from competing.

Advertisement

NEXT: Supreme Court Ruling Against EPA Inspires New Novel

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. So we lost $295 billion last time and now we’re doing it again? Jesus Christ. This is the perfect example of why technocracy fails.

    1. It’s kind of like buying a sinking ship and then spending money to repair the sails but not fix the leaks that are causing it to sink.

      1. We lost BAMILLIONS of dollars!

    2. Seriously. If this happened in a private enterprise, no way would that mistake get repeated. At least not by the same management.

  2. Sounds like what the government is doing with bullets. Buy up the stock to keep the citizens from getting it. We thought they would only use it as a method of bullet control but now they are using it to control our food supply. Conspiracy? It can’t be a conspiracy when it is happening right before our eyes.

    1. Uhm, yeah – we’ve already gone over this conspiracy theory and figured out that the number of rounds purchased are enough to give every one in the country all of 5 rounds each.

      The government purchase is a small percentage of the ammunition manufacturing capability of the world.

  3. Maybe this is a stupid question, but why can’t the government just let sugar producers sell sugar at a price that buyers will pay?

    1. Pfft. You clearly don’t understand the social contract or the merits of living in a community.

    2. Are you some kind of extremist whacko-bird?

    3. All US sugar producers would go under because the caribbean producers would destroy them.

      1. And the price of sugar would drop and the ingredients in candy and sodas would become less unhealthy since cane sugar is way better for you than that high fructose corn syrup shit.

        1. Yep.

          Well, maybe not that last part, as its a marginal difference at most.

          But, with cheap sugar, the lack of HFCS means that less corn gets grown and thus more barley gets grown.

          Which lowers beer prices.

          1. Fat drunk and stupid is no way to go through life, son.

            1. Fat drunk and stupid is no way to go through life, son

              I’ve found it pleasant

      2. “All US sugar producers would go under because the caribbean producers would destroy them.”

        That’s a feature, not a bug.

  4. Friend of mine did his electrical apprenticeship at a cookie/pre-packaged food company and got friendly with people in various departments.

    One ‘chef’ talked about how cheap the sugar was. It was cheaper than anything else that went into their foods. The problem they had was figuring out how to make the various products taste less sweet. lol…

    But yeah, big cups are the problem 🙂

  5. Ah, the Seventies. When a lady in an ad could fellate a food object and it was considered subliminal.

    1. I remember watching Braves games broadcast by Ted Turner back then and their repeated “honey shots” of hot women between the incessant ball-scratching in baseball. It made the MLB fun to watch.

    2. I’m pretty into her dieting advice, though.

      1. I dunno, ND, that ad is a pretty strong prima facie argument against commercial free speech.

        I’ll show myself out.

    3. And we’re not talking about a banana or popsicle that just looks vaguely tube-shaped here. You can tell they tried as hard as they could to give that cone the shape of a circumsised penis.

  6. The headline and the body refer to 400,000 POUNDS of sugar and the WSJ quoted piece to 132,000 TONS of sugar.

    The loss figure in the fourth paragraph is consistent with 400,000 TONS of sugar. 400,000 pounds sounds like far too small a purchase to have any influence on the market.

    Care to check your measures, KMW?

    1. The ton figure is from the previous buy up of sugar in 2000:

      1. And the losses in 2000 are the losses in the loan program. It isn’t supposed to match up with the ton figure.

        1. So the government buys a lot of sugar in an effort to prop up prices?probably 400,000 pounds in this case?and then, by law, must sell it to ethanol producers. But ethanol producers don’t really want it, so the government will have to (sorry!) sweeten the deal and sell it at a loss of about 10 cents per pound, or $80 million total.

          A 10 cents/lb loss on 400,000 lbs is $40,000. The loss calculation only makes sense if it is 400,000 tons.

          400,000 lbs probably isn’t even a single day’s purchase for Mars Co. and too small to have any effect on the market.

          1. I was right. It is 400,000 TONS:

            http://online.wsj.com/article/…..66164.html

    2. It must be tons. With pounds, none of the other numbers make sense,

  7. 1934 law

    That’s one of those years that, whatever they passed, you know it was probably completely fucking stupid.

    1. 1934 law

      They needed something equally stupid to replace prohibition.

      1. That’s what the National Firearms Act was for. Take all those Treasury agents on the liquor detail, and switch them to guns.

    2. Like most years, apparently.

      1. That one was worse than most. That’s also the year that the National Firearms Act was passed.

  8. Speaking of the food Nazis, has anyone ever wondered why, when the FDA goes to bust up illegal Amish whole milk crime rings, and the militarized goon squads swoop in, why cows never get shot?

    Are cows not menacing?

    1. The cows look too much like the EPA SWAT team’s mothers.

    2. They are. A cow will kill you where you stand! Don’t flash them gang signs, brah.

  9. “But then there was a bumper crop of sugar beets and a strong sugarcane harvest.”

    Oh no! Climate change is responsible for this tragedy!

  10. So not only does Michigan Sugar make my city smell like ass they waste my money too. Thanks!

    1. Wasting money that belongs to other – a big no.

      Cities that smell like ass – you’re just trying to make us jealous.

      1. I think he’s trying to entice Warty into leaving Cleveland.

    2. No it’s the Wolverines that make your city smell like ass.

  11. Thank God that this entitlement was spared from sequester!

  12. But Our Glorious Leader would never sanction such crony capitalism, would he?

  13. –We can’t make sugar cheap enough to compete. So subsidize it to preserve the industry.

    –We can’t make clothes cheap enough to compete. So the US industry goes overseas.

    I’m thinking someone in the clothes industry didn’t grease the right palms in Congress. Big Sugar gives Big Ethanol a run for their lobbying money.

  14. So $2M gets you $862M? So if I give them $20K I can get $8.6M? Where do I send the check?

  15. So $2M gets you $862M? So if I give them $20K I can get $8.6M? Where do I send the check?

    1. Just wire it to me. I’ll assure that it gets to where it needs to go.

      1. Sure just give me your bank account number and deposit it directly.

    2. It says something about the state of this country that while the economy limps along, lobbying provides such a huge ROI. I suppose that what it says is that the stimulus should have been bigger.

      1. They may be cheap whores but they’re our whores.

  16. $862 million, secured with the 4 billion pounds of sugar the companies were expecting to produce this year.

    Budgets are cut to the bone! We can’t cut anything!

  17. But there’s nothing to cut except White House tours.

  18. That looks like its gonna be some cool stuff. Wow.

    http://www.EliteAnon.tk

  19. Why does all of this sound like Milo Minderbinder is somehow involved?

  20. first you get the sugar, then you get the power, then you get the women…

  21. The politicians who support this should be caned or beeten.

  22. How to Eliminate Sugar from Your Diet

    Sugar can lead to many diseases, such as Type 2 diabetes and high cholesterol. So it’s definitely important to watch what you eat when it comes to sugar

Please to post comments

Comments are closed.