Sugar subsidies, Price Supports & Gov’t Give-aways

The U.S. sugar program is a collection of import restrictions, price floors and taxpayer-backed loans designed to prop up some 4,500 domestic sugar growers while costing everyone else billions in higher prices, lost jobs and preposterous bailouts.

Federal rules have restricted sugar imports to 15 percent since 1981. Before that, sugar imports accounted for half the U.S. market.

Although sugar products comprise only 1 percent of total domestic crop production, the sugar industry accounts for 35 percent of all lobbying expenditures by crop producers, according to the Center for Responsive Politics: $8 million in 2012 and nearly $42 million since 1990, including more than $16 million by the industry’s most powerful producer, the Fanjul family, which controls 40 percent of Florida’s sugar crop. The Fanjuls own Domino and C&H Sugar and operate refineries in multiple states, including California.

The sugar industry claims its subsidy is “cost-free.” Various federal studies show otherwise:

•  For each sugar-growing job saved through higher U.S. sugar prices, nearly three confectionery manufacturing jobs are lost.

•  Higher domestic sugar costs are forcing American companies to relocate their factories abroad. Between 1998 and 2011, the United States saw a 22 percent drop in confectionery-manufacturing employment, and a nearly 8 percent drop in food-manufacturing employment. For perspective: Total number of Americans employed in the sugar industry: 61,000. In industries using that sugar: 988,000.

•  42 percent of all sugar subsidies go to just 1 percent of sugar growers.

Critics say U.S. sugar policy artificially inflates sugar prices to benefit an exclusive group of processors — even though it leads to higher food prices. But this year, prices fell anyway. Now, the government could be poised to use taxpayer dollars to buy up the excess sugar.

Sugar costs are a complicated combination of import restrictions, production quotas and a kind of guaranteed price.

“The U.S. sugar system is essentially a Soviet-style control on production,” says Chris Edwards, an economist at the Cato Institute.

The effect of these policies, he says, is that U.S. sugar prices normally remain artificially high — sometimes twice the world price. (Last year, the price of sugar around the world averaged 26.5 cents per pound, compared with 43.4 cents in the U.S.) That hurts food companies and leads to higher prices at the grocery store.

“The core goal of policymakers has been to push up U.S. sugar prices to the benefit of U.S. sugar growers,” Edwards says.

A big part of this policy is a sweet loan program for the processors that refine sugar. To pay growers like Gravois right away, processors can take out government loans. The sugar itself is the collateral.

This is a video, but the print has mention of Sugar Subsidies about 10 paragraphs in:


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