Sugar

Big Sugar Leaves a Bitter Aftertaste

It's time to end the sugar industry's corrupt sweetheart deals.

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Taking candy from a baby is easy. Taking sugar from a senator? Not so much. For decades, economists, free market think tanks, good-government advocates, newspaper columnists, and even the occasional elected official have decried the special treatment enjoyed by the American sugar industry.

Under current policies, U.S. sugarcane and sugar beet farmers receive minimum price guarantees regardless of market conditions. In addition, the federal government allots 85 percent of the U.S. sugar market to domestic producers, and it imposes quotas and tariffs on the 40 countries that are allowed to export sugar to America.

In 1993, the Government Accounting Office (GAO) estimated that such policies were costing U.S. consumers $1.4 billion a year because they resulted in "higher prices for domestic sugar." Twenty years later, the University of Michigan–Flint economist Mark J. Perry estimated that this annual cost had grown to $3 billion by 2012, and that consumers and U.S. sugar-using businesses had paid "more than twice the world price of sugar on average since 1982."

In other words, sugar producers are getting a sweet deal, while consumers are getting screwed.

Alas, it's not just the nation's 3,913 sugar beet farms and 666 sugarcane farms that crave the sugar program's artificially sweetened revenues. The program also persists because it offers a steady source of money to elected officials.

In a June 2014 report, Bryan Riley, a senior policy analyst at the Heritage Foundation, noted that while sugar constitutes just 2 percent of the total value of U.S. crop production, the nation's sugar farmers account for 35 percent of the crop industry's total campaign contributions and 40 percent of its lobbying expenditures.

Over the years, major sugar companies such as American Crystal Sugar and Florida Crystals have donated millions of dollars to individual candidates and political action committees. According to OpenSecrets.org, the industry as a whole has donated $41.7 million since 1990. Traditionally it has contributed more to Democrats than Republicans, but in the 2012 election cycle it split its contributions 50/50.

The industry's aggressive lobbying gets results. In 2008, for example, the U.S. sugar trade got somewhat less regulated, when provisions that were drafted as part of the 1994 North American Free Trade Agreement finally kicked in and gave Mexican producers the ability to export unlimited amounts of duty-free sugar to the U.S. In March 2014, however, the U.S. sugar industry accused Mexican producers of dumping their crops on the U.S. market—i.e., selling it for less than the cost of its production, or for less than its domestic price—and asked the U.S. International Trade Commission and the U.S. Department of Commerce to take corrective action.

In October, Commerce announced an agreement between the U.S. and Mexico that will "prevent imports from being concentrated during certain times of the year, limit the amount of refined sugar that may enter the U.S. market, and establish minimum price mechanism to guard against undercutting or suppression of U.S. prices." So don't expect a price cut on Snickers bars any time soon.

Perhaps because the extra $3 billion we spend on sugar each year is amortized over a few hundred billion cans of soda and other sugar-laden treats, consumers don't seem to mind it much.

Greg Beato

And yet if we're truly in the midst of a "libertarian moment," when everyday Americans are supposedly fed up with politics as usual and corporate cronyism, how does sugar protectionism remain as American as apple pie? If there ever was a cause that might still inspire comity amongst the highly polarized populous, surely it's sugar.

Indeed, while 11 other countries consume more sugar per capita than the U.S. does, the average American still enjoys around 75 pounds of sugar a year. (This figure doesn't include high fructose corn syrup, zero-calorie artificial sweeteners such as aspartame and sucralose, or zero-calorie naturally derived sweeteners such as stevia.) Our appetite for the stuff cuts across all demographics: Whether you're a progressive elitist snapping up $5 Cronuts in Manhattan or a red-state value shopper buying club packs of Little Debbie Nutty Bars at Costco, you stand to gain from lower sugar prices.

Naturally, sugar farming lobbyists insist this isn't the case. "Sure, cheap subsidized foreign sugar might sound great," exclaims an American Sugar Alliance (ASA) promotional video that alludes to the fact that sugar farmers in Brazil, Mexico, and other countries benefit from their own homegrown subsidy programs. "But depending on others for food never works out as expected."

If we lose our strategic capacity to plant sugar crops, the video suggests, we'll compromise our food security, putting ourselves at the mercy of foreign sugar overlords able to increase prices when global supplies tighten. In October 2013, Tom Giovanetti, president of a Dallas-based research organization called the Institute for Policy Innovation, elaborated on this theme in an essay that argues against unilateral U.S. sugar subsidy disarmament. "Eventually," he concluded, "foreign producers would take advantage of a decimated U.S. domestic sugar industry and would raise prices on U.S. consumers."

But could Brazil—"the OPEC of sugar," according to the ASA—really jack up prices until even those club packs of Little Debbie bars become a rare delicacy only the 1 percent can afford?

"Why on earth wouldn't another producer come and try to take some market share if he sees a monopolist raking in the money?" asks Ike Brannon, formerly chief economist of the House Energy and Commerce Committee and now a fellow at the George W. Bush Institute, in a May 2014 editorial that appeared in USA Today.

Indeed, in a U.S. market free of price supports, allotments, tariffs, and quotas, Brazil wouldn't just be competing with domestic producers for America's business. It'd be competing with the hundred other countries where sugar farming occurs. And as the American Sugar Alliance and various other sugar farming advocates have themselves pointed out, scores of additional countries are just as willing as Brazil or Mexico to subsidize their crops. So if one country even started flirting with the idea of raising prices to non-competitive levels, others would jump at the opportunity to gain a foothold in the large U.S. market by offering more attractive prices.

The truth is that America's food security would in no way be jeopardized by the loss of a domestic sugar industry. Even America's Ding Dongs security would remain intact. "Sugar is a global commodity, with hundreds of thousands of producers all over the world," Perry explains. "This weakens the possibility that one could ever have market power over the U.S. Also there are close substitutes for sugar, like high fructose corn syrup and honey, which further weakens the case that the U.S. could ever be at the mercy of one country, or even a small group of them."

To bolster his argument, Perry points to coffee and bananas, two other commodity crops which we do not produce domestically in appreciable quantities and yet somehow manage to consume without having to pay monopoly prices to whoever the "OPEC of bananas" is.

Another case in point: TVs. U.S.-based TV manufacturing all but disappeared by the mid-1990s, but when was the last time you heard anyone complaining about the dearth of affordable flat-screens?

"Except for rare cases that involve national security or national defense, there is never any economic or logical reason to protect a domestic industry against foreign competition, and sugar is no exception," Perry concludes. Of course, sometimes all you need to keep a bad policy is a political reason. For many elected officials, the sugar program makes perfect sense: They enrich sugar farmers, then the sugar farms sweeten their campaign coffers.

It's a pretty small-stakes racket, but that's exactly what makes it so symbolically significant. Sugar reform should be easy. It would not require millions of Americans to give up cherished entitlements. It would not put any national interests at risk. (The worst case scenario: We'd have to change Sugar Babies' name to High Fructose Corn Syrup Babies.) If we genuinely have any interest in scaling back the kind of regulatory overreach that invariably promotes cronyism, sugar reform is the sweetest, lowest-hanging fruit on the tree.

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  1. Yes! The protected U.S. sugar market is becoming more of a bete noir with me, the older I get. Because, just as the article says, nobody but radical free market types even think twice about it, much less give a darn. But sugar is used in so many foods that if we had a free market in sugar, the drop in food prices could be significant, if not dramatic.

    Maybe some health nuts think they’re protecting the poor by making foods containing sugar more expensive. Maybe they’ve got too much granola on the brain to think straight!

    1. Expensive food requires more SNAP funding. And more SNAP bureaucrats.

    2. When it comes to circumventing US sugar quotas, there’s two words: stuffed molasses.

      Bonus Blame Canada edition!

    3. There’s also an environmental issue with the sugar subsidies. We are subsidizing pollution of the St Lucie River.

  2. the “OPEC of bananas”

    Nice band name.

    On a more serious note, it’s just a matter of time before sugar is taxed like tobacco or alcohol.

    1. Maybe they’ll try to tax red meat & fat first because Denmark tried to get people to accept a fat tax and failed, which is another way to say that fat taxes already have a proven track record of success.
      The anti-sugar people have a lot of competition against the ever-present anti-meat (and thus anti-fat) crowd.

      Or maybe they will do a sugar tax because that’s such a stupid idea given how I assume starchy carbs wouldn’t be taxed (thus defeating nearly all supposed health benefits from it).

      Sort of like when New York banned trans fat when they should have banned synthetic fats instead (or better yet not banned anything and just tried to non-violently educate people)…
      Now butter is technically banned because it has naturally occurring trans fats that have never been proven to be harmful but margarine makers can use loopholes & technicalities to put in their laboratory-made “hydrogenated vegetable oil” or whatever they call trans fat these days. The whole problem with trans saturated fats in the first place was that they were man-made by blasting unsaturated fats with hydrogen which created fats the human body mistook as normal fat and used as a building material for cells but these could not function the way normal fat does in the body as they were synthetic and built incorrectly.

      1. Sugar has been a common item to tax over time.

  3. Maybe cut Florida property taxes and sugar cane growers could lower prices. I know, I’m crazy, I’ll show myself out.

  4. Nitpick: The proper terms are Small Sugar and Big Government.

  5. U.S.-based TV manufacturing all but disappeared by the mid-1990s, but when was the last time you heard anyone complaining about the dearth of affordable flat-screens?

    I remember brain-dead “economists” back then bitching about Japan “dumping” TVs on the American market. As if selling me a trinitron for less than they did last year is some kind of act of aggression.

    -jcr

    1. I’ve noticed a drop in quality control over the years (more dead pixels, more parts that just break off, etc) I’d rather pay a bit more for something solid than have the absolute lowest possible price. But I can’t seem to find any supplier that doesn’t have the same systemic problems.

      1. If you think more domestic manufacturers are going to increase quality, you never had the joy of owning a Zenith TV

        1. I was talking with regard to the drop in prices. Where in my comment did I address “domestic manufacturing”?

      2. How about all the electrical issues with cars these days. All these gizmos are nice but my last two cars have had electrical issues and I see that as an issue on more and more recalls.

        1. yeah I wonder when a car manufacturer will start making a new car without all kinds of wiz-bangs and gizmos. people could save thousands, plus without all the extra crap in them cars are much easier to work on yourself. I’ve never had manual windows break on me, I’ve never had ABS breaks because the sensors always crap out, and all the specialized tools needed for maintenance are ridiculous. I’d rather have a cheap easy to maintain car than a foot activated lift gate.

    2. I remember brain-dead “economists”…”dumping” TVs

      and steel. and cars. and…on it goes. Exactly right on the brain dead. Global labor and capital movement force leaders to continuously innovate or get cycled back down to low wage manufacturing jobs. If only there were a couple of words to describe this creative destruction 😉

    3. “I remember brain-dead “economists” back then bitching about Japan “dumping” TVs on the American market.”

      That’s for lower prices. Higher prices means your “gouging”. If you have the same price as your competitors, you’re “colluding”.
      If you don’t have competitors, you’re a “monopoly”.
      Any which way, cut it out!

      1. And if you sold it to american socialist at an agreed to price that he later regrets you are a crook.

    4. Look, there is a consensus* among economists agree that getting a free lunch paid for by dimwitted foreign bureaucrats is a bad thing.

      Therefore you should not accept a free or subsidized lunch, but pay full price from your local lunch seller to ensure maximum employment and sufficient aggregate demand.

      *by consensus, I mean a consensus among people who agree with me.

  6. Well, you know, that’s how it goes with “capitalism”. This is why we need a centrally planned economy!!! If it wasn’t for government, we’d all be paying artificially controlled prices for everything!

    1. Without government, who would stop evil cartels from boosting prices? Checkmate, loonytarians.

  7. The high price of sugar also keeps the corn lobby happy. I mean,why use a sweeter made form corn if sugar is cheap?

    1. Also, the import quotas and price controls prevent a sugar ethanol industry from forming in this country… Which from what I understand is much more efficient than corn ethanol to produce.

  8. “The truth is that America’s food security would in no way be jeopardized by the loss of a domestic sugar industry.”

    Well, THAT’S a relief!

  9. How is sugar any way related to food security?

    I’m pretty sure we’d be more health secure if we cut out the Twinkies from our collective diet…

  10. It is worse than just the price of sugar. If sugar came down in price, there would be a lot less use of corn sugar. If cane sugar was consumed in soft drinks Americans would lose tons of weight.

    It is a science fact that the brain does not know it has had any corn sugar thus the craving never gets turned off.

    I refer to Dr. Wendall Fleet,MD U of WA.
    Love to argue this point with anyone.

    1. That’s a huge, huge exaggeration there considering sugar is still 50% fructose and anyways the major indirect contributor to leptin insensitivity is insulin resistance & hyperinsulinaemia from eating too many carbs & destroying your body’s ability to cope effectively with dangerously elevated blood sugar levels.
      Having chronically elevated insulin levels keeps your fat cells from releasing fat which makes the extra leptin they release in the bloodstream pretty much useless which in turns makes your brain less sensitive to leptin as your fat cells produce more but can’t ever release their fat even if the brain tells them too because the pancreas has lost the ability to tightly maintain an adequate insulin level from being forced to cope with more carbs than it was ever evolved to process (& way more fructose as well as it cripples the liver’s ability to turn carbs to fat thus forcing the pancreas to compensate by pumping even more insulin).

      If you want a good history and overview of current nutrition research get Gary Taubes’ book Good Calories Bad Calories that’s one of the most informative books I’ve ever read & I read a lot of books

  11. Well, sugar people are smarter than open market competitors. Not that I mind open market competition. I actually think maybe someday we should experiment with some aspects of it here in the US. Just for starters, we could compensate legislators for lost campaign contributions they would endure by legislating responsibly. I don’t know if the figures cited in this article are approved, but if they are, it could feasibly save us some money.

  12. Best Mythbusters ever was the taking candy from a baby…awesome.

  13. It’s time to end the sugar industry’s corrupt sweetheart deals.

    Also time to close military bases and bring soldiers home. And eliminate income taxes. And payroll taxes. Plus abolish the Fed.

    I am willing to accept 2:1 odds on any of these happening in the next six years.

  14. “Perhaps because the extra $3 billion we spend on sugar each year is amortized over a few hundred billion cans of soda and other sugar-laden treats, consumers don’t seem to mind it much.”

    In reality, this is part of the reason why corn syrup is in our soda rather than pure cane sugar. Corn syrup gets subsidies, making it cheaper, while sugar is more expensive. Economics is about alternative uses.

  15. First you get the subsidies, then you get the protectionism, then you get the women.

  16. I live in SW FL and sugar is farmed in the center of the state. Growing it takes huge amounts of fertilizer which ends up in the Gulf, especially in the summer. It turns the Gulf’s water into pea soup for 10s of miles off shore. It also coats the beach with red seaweed. An environmental disaster. The sugar industry also pays almost no property taxes and imports workers from Jamaica and Haiti so we get zero economic benefit. The sugar companies are not even owned by US shareholders. These subsidies for the non-US rich are at the economic and environmental detriment of everyone else. What an example of the dysfunction of our government.

  17. Concentrated benefits, dispersed costs.

    $1.4 billion divided by 316 million people – that amounts to $4.43 extra a year that DC Debbie pays for sugar – less than her daily venti soy macchiato latte she slurps from Starbucks.

  18. This is an excellent article! Crony Capitalism will be the downfall of this country unless something changes. Corruption breeds more corruption and this lot in DC are as corrupt as they come.

    1. Don’t sugar coat the problem!

  19. Your buckyballs has infinite solutions that you can create. A sense of achievement comes with inventing anything of artistry and fascination . With buckyballs you can mold infinite arrangements of shapes that you will love to flaunt, and create plenty of patterns that are unique, and have never even been seen before!

  20. 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

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