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Whether it be through taxes, regulations, or other big government policies, the federal government is quite adept at finding ways to sap money out of your wallet and into government coffers and the pockets of big special interests. One would think that the least likely suspect to drain your bank account would be sugar. It sweetens our coffee and other sweet treats we enjoy on a daily basis. However, U.S. sugar policy has been causing incredible economic harm to American consumers for years.
The government began protecting the domestic sugar industry way back in 1789, when it slapped a tariff on imported sugar. This has only expanded in the years since then, and has gotten wildly out of hand.
Sugar in the U.S. costs far more than it does in the rest of the world. Recent estimates from the Department of Agriculture (USDA) show that raw sugar in the U.S. costs 84 percent more than it does in the global market, and refined sugar costs a staggering 104 percent more than the rest of the world. While the U.S. sugar industry may be pleased with these statistics, families and businesses who need sugar bear the burden of propping up special interests. Estimates also show that consumers lose $4 billion as a result of U.S. sugar policy.
This policy is also costing Americans thousands of jobs. Candy companies are either being forced to cut back on workers or relocate because of the increased cost of sugar. Life Savers, for example, moved its factory from Michigan to Canada, citing high sugar prices as its primary reason for doing so.
Kirk Vashaw, the CEO of Spangler Candy Company, says he could hire far more workers if not for the U.S. sugar policy. We hear a lot of talk about how protectionism is supposed to “bring jobs back to America,” but this is a clear example of how protectionism and trade barriers, including tariffs, force jobs out of the country in favor of special interests.
The policy uses almost Soviet-style government controls to manage sugar prices and how much they deem fit to be allowed into the country. They do this through import quotas, which allow imports below a certain quantity to be taxed less than larger shipments. This artificially warps the market, caps supply, and raises prices. This is happening in the nation we think of as the beacon of capitalism and free markets. Legislators are essentially complicit in running a sugar cartel for the benefit of a select few domestic producers.
The social costs are quite hefty as well. Douglas Irwin, a Dartmouth University professor of economics, makes the case that sugar farmers in other parts of the world, mainly in the Caribbean and Central America, will stop producing sugar after being essentially shut out of the U.S. market. This will lead them to lose their business and source of income, and many could turn to cultivating illegal narcotics instead. Our policies are putting foreign farmers out of business and leaving them few alternatives.
There is also an environmental cost. Sugar cane farms in Florida have contributed mightily to the deterioration of the Everglades. They end up creating toxic algae and a substantial buildup of phosphorous from the fertilizers they use to make production more efficient. Despite this, U.S. sugar production still isn’t as efficient as sugar production elsewhere.
The House Agriculture Committee recently released its Farm Bill proposal. The current policy was established in the 1981 Farm Bill nearly 40 years ago. This year’s proposal does not address the shortcomings and costs associated with these outdated policies, instead preserving the status quo. This is a huge missed opportunity.
Fortunately, there is still time to correct this oversight. Rep. Virginia Foxx (R-N.C.) introduced the Sugar Modernization Act, H.R. 4265, last year to reduce regulations and restrictions on sugar imports. FreedomWorks joined a coalition of other free market organizations signed onto a letter supporting the bill earlier this year. The text of this legislation can, and should, be added as an amendment to this year’s Farm Bill.
Members of Congress have the chance to implement reforms to the Farm Bill this year, bringing more of the free-market principles that our country stands for into agricultural policy. Reforming sugar policy is a change that has been long overdue and should be welcomed and championed by businesses and consumers across the country.