Sugar Coating the Farm Bill

The Washington Post is rightly calling "foul" on a provision of the execrable new farm bill that is wending its expensive and deleterious way through the halls of Congress. There is no reason for the U.S. to produce so much as a gram of sugar, yet Congress has propped up Big Sugar for decades with import restrictions and subisidies.

There was some hope that this cozy arrangement might begin to unravel as provisions of two free trade agreements opened the U.S. sweetener market to some imports from Mexico, Central America and the Caribbean. But Big Sugar's friends in Congress are rushing to the barricades to prevent this. As the Post editorial notes:

Among the least defensible provisions under discussion is a plan by those lawmakers to prop up U.S. sugar cane and sugar beet farmers. The background to this is long-standing federal protection for sugar, which takes the form not of direct subsidy payments but of interlocking price supports and import quotas. For decades, U.S. sugar policy has hurt sugar farmers and cane-cutters in poor countries and raised prices of candy and soda for U.S. consumers (admittedly not altogether a bad thing, given the obesity epidemic). It has also driven some U.S. candy producers either out of business or overseas.

The 2005 Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), as well as newly effective provisions of the North American Free Trade Agreement, threatened to upset this cozy arrangement by opening a sliver of the U.S. market to sugar from Mexico and the DR-CAFTA countries. A sugar-lobby effort to restore the old status quo failed earlier this year, so the lobby and its Capitol Hill supporters have come up with an ingenious new way to protect the industry: raising the support price for U.S. sugar, already above the world price, for the first time in 23 years, while requiring the federal government to set aside a certain quantity of imported sugar for conversion to ethanol. Never mind the untested economics of sugar-based ethanol production in the United States. The Sweetener Users Association, an organization of sugar-using industries, estimates that the farm bill will add $2 billion to grocery bills over five years. Commodity prices and farm incomes are exploding, imposing higher food costs on American consumers and threatening poor people around the world with outright hunger. Perhaps only in the U.S. Congress could it seem like a good time to compound the problem with a dose of sugar shock.

This is just outrageous. My column on other Farm Bill Follies here.