Federal Sugar Subsidy a Relic of Depression-Era Politics

Citizens for a Sound Economy (CSE) used the occasion of a today’s hearing in the Senate Agriculture Committee to remind Americans that the demise of the federal sugar subsidy is long overdue.

The federal government protects domestic sugar farmers from competition in the world sugar market. The government guarantees sugar growers a minimum price through various loan programs, as well as quotas and tariffs on sugar imports. Growers who put their sugar up as collateral for a loan are allowed forfeit their crop to the government if the price falls below the set “floor.” Essentially, the government promises to buy every pound of sugar that growers are unable to sell at the fixed price.

According to the General Accounting Office, the sugar program cost American consumers $1.9 billion in 1998 in artificially high prices, with most of that money going into the hands of a small group of sugar producers.

Regrettably, higher prices are not the federal sugar subsidy’s only costs. The program’s guaranteed price has been a significant cause of the environmental degradation of the Everglades ecosystem. Of the 700,000 acres that make up the Everglades Agricultural Area, nearly 500,000 acres are used to grow sugar. Although there are legitimate scientific questions surrounding the debate over fertilizers and phosphorous runoff, it cannot be denied that federally guaranteed profits have subsidized the artificial consumption of wetlands for agricultural uses. At a time when the federal government is proposing to spend $11 billion on so-called Everglades “restoration” efforts, continuing to aid and abet its further degradation makes little sense.

Federally guaranteed commodity price supports are a relic of Depression-era politics. Congress should make this a relic of the 20th Century by ending the unfair and unneeded program.