D. Dowd Muska


Sugar Socialism in ‘The Land of the Free’

May 31, 2012

In summer, it’s all but impossible to obey Dr. Atkins.

Iced tea, Kool-Aid, and milkshakes. Fudgsicles and banana splits. Toasted Almonds, Hoodsie Cups, and frozen candy bars.

They’re all so good.

And they all cost more than they should, thanks to protectionism.

The most obscenely hypocritical component of U.S. trade policy is fedpols’ coddling of sugar. While the blame is usually placed on the politically powerful cane industry in Florida, the sugar-beet lobby presses just as hard for D.C.’s favors -- and it’s more geographically dispersed, with members in Michigan, Minnesota, North Dakota, Nebraska, Colorado, Wyoming, Montana, Idaho, Washington, Oregon, and California.

Under the federal government’s sugar program, processors, refineries, and mills get loans from the Commodity Credit Corporation to buy from growers at prices well above the global market rate. Producers operate, in the words of the Coalition for Sugar Reform, “under a government imposed and legally-binding limit on the amount … [they are] permitted to sell each year.” Food manufacturers looking for relief abroad lack options, because a byzantine quota-and-tariff system limits competition. In 2010, 73 percent of U.S. sugar consumption was met domestically.

The result, noted Sen. Jeanne Shaheen (D-NH) and Sen. Mark Kirk (R-IL) in a 2011 POLITICO op-ed, “is a U.S. sugar price that’s almost twice the world average.” A study by Promar International found that American consumers pay about $1.00 more than necessary for a 5-pound bag of sugar, which adds up to “more than $4 billion a year.”

The response from Big Sugar: Jobs, jobs, jobs! We must preserve “American” jobs! Nice sound bite, but it’s not as simple as that. In 2010, U.S. sugar farming and processing employed just 16,871 workers, while businesses that consume sweeteners -- e.g., confectioners, bakeries, and restaurants -- supplied over 600,000 jobs.

In 2002, The Christian Science Monitor reported that due to high-priced sugar, “[candy] manufacturers are closing U.S. plants and slowly moving operations across the borders -- south to Mexico and Latin America, and north to Canada.”

Eight years later, The Patriot-News, Harrisburg’s daily, found that Hershey’s recent investment in Mexico “was the centerpiece of a three-year global supply chain transformation … that saw the company shutter several North American plants and shed 1,500 jobs, including about 800 positions at Hershey’s three plants in Dauphin County.”

Given the political power of farmers, Washington’s five-year plan for agriculture (no, that’s not a joke), set to expire at the end of September, will likely be renewed sometime in the next several months. Despite the destruction sugar policy wreaks, look for it to stick around.

Big Sugar’s confident because it’s survived previous challenges. Its only close call came in 1996. That February, Rep. Dan Miller, a courageous Republican from Florida, nearly secured a full-bore repeal of the sugar scheme. It failed by a handful of votes, but the congressman fought on, testifying before the Senate in 2000 that the program was “an embarrassment to this Congress and this country … . It is bad for the consumer. It is bad for jobs in this country. It is bad for trade. It is bad for the environment. ... We have created a cartel, not much different from OPEC, to control sugar prices in this country.”

Miller term-limited himself after a decade, and few in the House assumed his cause. In the Senate, Richard Lugar (R-IN) has commanded an assault on the Sugar Trust for decades. Last year, he denounced its “complicated system of marketing allotments, price supports, purchase guarantees, quotas and tariffs that only a Soviet apparatchik could love.” With Lugar’s imminent departure from Washington -- he paid the tea party’s price for backing other manifestations of runaway government -- perhaps Shaheen and Kirk will take over.

“U.S. sugar policy has a long history,” lamented economist Mark J. Perry, “going back to 1789 when the First Congress of the United States imposed a tariff upon foreign sugar, and is a perfect illustration of trade protection that ignores the viewpoint of disorganized, dispersed consumers in favor of the concentrated, well-organized interests of producers.”

America’s sugar socialism has earned the pan-ideological ire of The Wall Street Journal editorial page, Mother Jones, Citizens Against Government Waste, The New York Times editorial page, the Cato Institute, the Consumer Federation of America, and the American Enterprise Institute.

But protectionism is a sweet deal for the farms and factories that would not exist if not for federal sugar policy. They’re used to getting what they want -- and quite comfortable with passing the bill on to you.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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