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US Sugar Policy: Not So Sweet for the Economy
ATR ^ | 2012-08-13 | Laurel Kays

Posted on 08/16/2012 1:18:49 PM PDT by 92nina

According the USDA estimates, the United States will use approximately 11,885,000 tons of sugar in fiscal year 2012-2013. Yet despite this incredibly large and ever increasing use of sugar, few Americans are aware of the economic price we pay for the government’s cartel-like control of the US sugar market. With Congress expected to reconsider the 2012 Farm Bill when it returns to DC in September, it is important to understand how this control operates and the economic harm it causes to US interests.

Sugar prices in the United States are kept artificially high through a 3-part system of economic controls. First, the government imposes a rigid quota system on sugar production. Currently, 54.35% of US produced sugar must be beet sugar, while the remaining 45.65% is produced from sugar cane. Each state and sugar company is then assigned a production quota based on a complicated formula decided upon by the USDA. This cartel structure makes it illegal for producers to sell sugar that exceeds their given quota. The government further controls the sugar market through a two-tiered tariff system that allows US growers to provide about 85% of the market and keeps prices artificially high. Quotas are set for both beet and cane sugar imports, and those selling under that quota are charged a lower tariff than those selling above it. Finally, the federal government operates a complicated loan system to ensure sugar prices do not fall below a government-mandated price floor. The USDA loans money to sugar processors, with the sugar being counted as collateral for the loan. Processors in turn agree to pay sugar growers a minimum price. If the market price of sugar rises, processors can sell their sugar on the market in order to repay the government loan. If it falls however, processors can forfeit their sugar to the government rather than repaying the loan. In this manner, the price of sugar is guaranteed for both growers and processors.

Wholesale Sugar Prices U.S. vs. World, 1982 to 2010

These market control methods work out very well for the approximately 4,700 United States sugar growers who benefit from them. For millions of US consumers, taxpayers, and workers however, the costs of these policies far outweigh any benefit. Analysts estimate that US consumers and businesses pay anywhere from $3.5 to $4.5 billion in higher costs due to the government’s inflation of sugar prices. Taxpayers too, shoulder the burden of the government’s intrusion in the sugar market. The Congressional Budget Office estimates that the surplus sugar the government buys and sells, at a loss, to ethanol producers, will cost taxpayers $374 million over the next decade. Such a figure does not include the cost of personnel and resources to oversee and manage the government loan, tariff, and quota programs. Despite these figures, proponents of current protectionist sugar policies claim that they are necessary to save jobs. Yet for every job in sugar production that would be lost without government programs, an estimated 3 jobs in manufacturing are lost due to the costs imposed on manufacturers by artificially high sugar prices.

As clear as the evidence is against current sugar programs, the 2012 Farm Bill does not seem to have any real promise of eliminating or decreasing government control of the sugar market. Rep. Bob Goodlatte introduced an amendment to the House Agriculture Committee which would have limited price supports and import restrictions on sugar. For example, higher tariff fees implemented in the 2008 Farm Bill for imports over USDA quotas would have been eliminated. Such a step towards a more free-market sugar industry however was defeated soundly before it even escaped committee. A similar amendment introduced in the Senate by Sen. Jeanne Shaheen was likewise voted down.

Crony Capitalist Cartoon

Read more: http://atr.org/sugar-policy-sweet-economy-a7127#ixzz23jzkcmS9


TOPICS: Business/Economy; Food; Government; Health/Medicine
KEYWORDS: corruption; economy; govtabuse; taxes
Programs continued in the 2012 Farm Bill are costly to the economy, taxpayers, and businesses
1 posted on 08/16/2012 1:19:01 PM PDT by 92nina
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To: 92nina
Kill the quota. I can't think of a good reason to control beet sugar vs cane sugar.

Keep the tariffs, we've got enough unemployed. And do not want to support Castro's communism.

Take a look at he loan guarantees. I support agriculture subsidies because feeding an army is a militarily sensitive industry.

2 posted on 08/16/2012 1:25:13 PM PDT by DannyTN
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To: DannyTN

I’m wondering if the loan guarantees can be replaced with crop insurance. Or does that just protect a farmer from the crop not developing, but not a drop in the market price.


3 posted on 08/16/2012 1:27:33 PM PDT by DannyTN
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To: 92nina

How about making it cheaper to use cane sugar over HFCS (High Fructose Corn Syrup). I went to a friend’s cafe in Indy last week and he had Coke from Mexico and it uses real cane sugar. I forgot how good it tasted versus it with HFCS.


4 posted on 08/16/2012 1:34:49 PM PDT by CORedneck
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To: CORedneck

Interesting stuff, I did not know they kept the prices of sugar up.. I should have realized that though, I mean they do keep the prices of so many other products in the produce section..


5 posted on 08/16/2012 1:49:54 PM PDT by Nightlife138
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To: 92nina

Bump for later


6 posted on 08/16/2012 1:54:32 PM PDT by PGR88
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To: DannyTN

The tariffs are a job-killer. American candymakers are up against foreign competitors who get their sugar at half the US price, which is why Kraft moved most candy production to Canada. As for the Cuba issue, sugar is a fungible commodity just like oil; lots of our imported sugar comes from friendly Caribbean countries.


7 posted on 08/16/2012 1:58:07 PM PDT by Squawk 8888 (Tories in- now the REAL work begins!)
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To: Nightlife138

In Canada we have a similar problem, which is the “Supply Management” of milk & eggs wherein a farmer pays more for the quotas than he does for chickens or cows. This has led to some absurd situations, such as ice cream manufacturers only allowed to use imported milk to produce ice cream for export. Canadians pay roughly double what Americans pay for dairy products.


8 posted on 08/16/2012 2:02:09 PM PDT by Squawk 8888 (Tories in- now the REAL work begins!)
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To: Squawk 8888

The solution is not to lower the tariffs on sugar but to raise them on everything else. That’s why we have so much unemployed. We lowered the tarriffs from their historical norms of about 15%, to 5% in 1980 and now down to 1%.

We are leaving all of our jobs wide open to worldwide competition at $1/day wages.

Raise the tariffs and put American’s back to work.


9 posted on 08/16/2012 2:04:14 PM PDT by DannyTN
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To: CORedneck


10 posted on 08/16/2012 2:05:18 PM PDT by Joe Brower (Sheep have three speeds: "graze", "stampede" and "cower".)
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To: DannyTN

That won’t work for everything. Under the Canada-US Free Trade Agreement, goods cross the border duty-free.


11 posted on 08/16/2012 2:07:07 PM PDT by Squawk 8888 (Tories in- now the REAL work begins!)
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To: DannyTN

Slap tariffs on sugar to make us uncompetitive in the world candy market, but sign a NAFTA treaty which allows finished products being made with cheaper sugar to be imported duty free from Mexico and Canada.

Are these guys SOOOOOOPER Geniuses or what?


12 posted on 08/16/2012 2:14:21 PM PDT by Buckeye McFrog
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To: DannyTN
Did you read the story here a few days back about the Prison System here in the US that pays convicts 23 cents an hour and is bidding on government clothing contracts?

They are fixin’ to close more than one small American business.

13 posted on 08/16/2012 2:22:14 PM PDT by PeteB570 ( Islam is the sea in which the Terrorist Shark swims. The deeper the sea the larger the shark.)
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To: PeteB570

Really? We still have clothing manufacturers here?


14 posted on 08/16/2012 2:26:07 PM PDT by DannyTN
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To: Squawk 8888
That won’t work for everything. Under the Canada-US Free Trade Agreement, goods cross the border duty-free.

Well that's where we've screwed up. We've entered unwise trade agreements that have forced all of our protective tariffs down undoing what worked for the founding fathers.

And now we have 25% unemployment.

15 posted on 08/16/2012 2:27:40 PM PDT by DannyTN
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To: DannyTN
Really? We still have clothing manufacturers here?

ROFL Beat me to that comment! Let's see our prisoners @ 23 cents per hour will under cut red China's neo-slaves @ 25 center per hour, until China gets its North Korean 'guest workers' up and running.
16 posted on 08/16/2012 2:31:25 PM PDT by khelus
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To: DannyTN

There’s a reason Marx advocated ‘Free Trade, the free movement of labor and capital across national borders without any consideration of patriotism or ethics - to speed up global communism.


17 posted on 08/16/2012 2:35:08 PM PDT by khelus
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To: CORedneck

I was paying the premium for pepsi throwbacks. And then Pepsi came out in favor of gay rights. Now I’m drinking HFCS again.


18 posted on 08/16/2012 2:45:11 PM PDT by DannyTN
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To: 92nina

same thing is true for milk and other commodities. just another way the government controls what we have access too.....centraliz3ed planning is always a bad idea


19 posted on 08/16/2012 2:48:03 PM PDT by Nifster
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To: DannyTN

No premium for Pepsi Throwback here- we pay less for sugar :-)


20 posted on 08/16/2012 3:01:03 PM PDT by Squawk 8888 (Tories in- now the REAL work begins!)
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To: khelus; DannyTN
It's no joke. A couple of the companies were paying $9 an hour with limited benefits.

The company using prison labor was under cutting them and getting the government contracts.

The contracts were not big by the global scale but big enough to keep a few hundred workers employed.

21 posted on 08/16/2012 3:09:10 PM PDT by PeteB570 ( Islam is the sea in which the Terrorist Shark swims. The deeper the sea the larger the shark.)
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To: 92nina
It's time to dump this crap. The high price and government controls for candy companies like Hershey to move to Canada.

Profit on candy per unit is small and thus volume is the key to success. Doubling the cost of the main ingredient is not profitable.

Then the Dems (and some FReepers) whine about “jobs going overseas” blah, blah blah.

22 posted on 08/16/2012 3:13:42 PM PDT by Fledermaus (Democrats are dangerous and evil. Republicans are useless and useful idiots.)
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To: DannyTN

Been there, done that. It was called the Great Depression.


23 posted on 08/16/2012 3:16:33 PM PDT by Fledermaus (Democrats are dangerous and evil. Republicans are useless and useful idiots.)
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To: DannyTN
Keep the tariffs, we've got enough unemployed. And do not want to support Castro's communism.

There's an embargo of trade with Cuba. Dropping the sugar tariffs wouldn't change that.

Dropping the sugar tariffs would decrease the price Americans pay by about 40% and might stop the American candy industry from moving to Mexico. How's that for your unemployed in this country.

More jobs have been lost in America because of the sugar tariffs than have been saved. Crony capitalism at its finest.

24 posted on 08/16/2012 3:22:54 PM PDT by BfloGuy (Without economic freedom, no other form of freedom can have material meaning.)
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one word: stevia


25 posted on 08/16/2012 3:34:09 PM PDT by combat_boots (The Lion of Judah cometh. Hallelujah. Gloria Patri, Filio et Spiritui Sancto.)
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To: DannyTN

“I support agriculture subsidies because feeding an army is a militarily sensitive industry.”

when the ability to “feed an army” is in question, there is plenty of time to consider “subsidies” to farmers;

when the ability to “feed an army” is not in question, keeping the subsidies is not about “national security” it’s pure crony-capitalism and a waste, besides being an egregious economic mistake


26 posted on 08/16/2012 4:36:59 PM PDT by Wuli
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To: 92nina

“Conservative” Marco Rubio voted to keep the subsidies going. Bought and paid for like most of the other clowns in Congress.


27 posted on 08/16/2012 4:47:41 PM PDT by Oldhunk
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To: Fledermaus
Been there, done that. It was called the Great Depression.

When the Great Depression occurred, imports were only 4% of GNP. Exports were 5%. The net change during the great depression was less than 0.2% of GNP. Exports simply weren't big enough to cause the Great Depression. Plus the depression was already underway when Smoot-Harley went into effect.

The Great Depression was caused by the Federal Reserve which was only about 10 years old. They became afraid of how fast money supply was growing in part due to the stock market speculation. They tightened down hard and it wrecked the economy. That was actually the second time they had done that and caused depressions both times. The FED learned it's lesson and we haven't had a depression since. Except for this thing we are in now, which isn't the Fed's fault.

Imports are now 16% of GNP. And considering how much lower China's wages are than ours, if we returned those jobs to the U.S. it would be probably result in much more than 16% to our GNP.

Consumers would feel the price increase from tariffs, but the government deficits would shrink dramatically as people went back to work. Tax payers are paying for this economic mess anyway. Might as well get something out of it. And get our people back to work.

28 posted on 08/16/2012 6:48:44 PM PDT by DannyTN
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To: DannyTN

Yes, the Fed sucks then and now. But the tariff walls went up all over the world and our depression was probably nirvana compared to some other countries at the time.

I don’t have a problem trying to pay good wages to make trinkets here, but it’s not just the minimum wage or unions. It’s all the massive government regulations over dozens of agencies and hundreds of programs. Many at odds with each other putting business in the “damned if I do...” mode.

Thus sugar tariffs and protection. How many jobs are being protected in sugar versus those lost in candy manufacturing or soft drink bottling? Then they switch to corn fructose and everyone gets their panties in a wad about health issues. And along with the even more stupid ethanol subsidies we see massive corn prices.

The effects on meat production aside, it’s causing world wide inflation hurting the truly poor everyone says they care about.

If you want to put up a wall and keep our economy within ourselves alone, it might work. But that’s so against the reason the USA exists, IMHO.

I also don’t worry or buy the low wage argument. It’s irrelavent in that you can’t compare our society to emerging ones. It’s not so much “slave labor” as it is emerging classes moving up within their society like in India. $10 a day to them is middle class and if more than one family member can get work it means moving from a shack to a building and eating regular.

Nothing we can do will ever stop that development. If we don’t put factories and call centers, etc. into those countries Europe will. Russia will. Even China will. And we won’t be able to compete with the price. So we must learn to sell other stuff to the world like better durable goods, servcies like banking, finanacial markets, computer technology, management, etc. Also, a lot of the centers and factories we open overseas are their to service those markets. Nissan, Toyata, BMW, Mercedes, Honda, Volkswagen all make cars they sell in North American in mostly the United States. Do their people whine about shipping jobs overseas too? I’m sure some do.

We went from agri to industry to service to who know where. We can’t stop that evolution as many have tried througout history. Horse farmers, pardoned my pun, railed against the trains and horseless carriages. lol


29 posted on 08/16/2012 8:45:47 PM PDT by Fledermaus (Democrats are dangerous and evil. Republicans are useless and useful idiots.)
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To: DannyTN

Good post btw. Oh my, it’s finally raining again in Franklin. We got a good one Monday morning.


30 posted on 08/16/2012 8:55:41 PM PDT by Fledermaus (Democrats are dangerous and evil. Republicans are useless and useful idiots.)
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To: Fledermaus; DannyTN; PeteB570
... I also don’t worry or buy the low wage argument. It’s irrelavent in that you can’t compare our society to emerging ones. It’s not so much “slave labor” as it is emerging classes moving up within their society like in India. $10 a day to them is middle class and if more than one family member can get work it means moving from a shack to a building and eating regular.

Nothing we can do will ever stop that development. If we don’t put factories and call centers, etc. into those countries Europe will. Russia will. Even China will. And we won’t be able to compete with the price. ...


You just made a great argument for tariffs.

These 'emerging' classes are emerging at the expense of the national security and living standards of the middle class of the US. Global corporations will only allow the emergent class to improve their lot ever so slightly. For example Red China is now importing 'guest workers' from North Korea to complete with its own people

To repeat, there is the reason Marx advocated 'Free Trade', i.e. free movement of labor and capital over national boundaries without any considerations of patriotism or ethics. 'Free Trade' plays to human nature's dark side and weaknesses.

When one removes patriotism and ethics from economics, the consequences are pursuing the cheapest labor, worst working conditions, most lax safety and environmental standards until we all live like serfs in third world countries.

In the short term the consequences have been hidden from the US middle class by access to cheap electronic toys and cheap credit.

People will live in such dire circumstances that they will embrace any communist/Marxist that comes along promising hope and change.

Globalists have a nice Marxist name for this process: harmonization. This is why I repeat what others have stated: Globalists and 'Free Traders' are communists in business suits.

Globalists have a nice Marxist name for this process: harmonization.

This impoverishment works in conjunction with Cultural Marxism, one reason many voters in the US embraced 'hope and change' is Cultural Marxism's infiltration of our institutions including education, the media, and economics. The cultural marxists covered both bases: the left and the right. Their story for the right included: compassionate conservatism, amnesty for the downtrodden, open borders that don't impede free movement of goods and natural persons, maximum short term profits, and the idea that neither ethics nor patriotism have a place in business

As to the complaints of excessive regulation, global corporations have no problem with regulations or crony relations with big government. They will even 'help' write those regs which are a wonderful way to suppress competition from small business and start ups.
31 posted on 08/17/2012 6:39:06 AM PDT by khelus
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To: PeteB570; DannyTN
It's no joke. A couple of the companies were paying $9 an hour with limited benefits.

The company using prison labor was under cutting them and getting the government contracts.

The contracts were not big by the global scale but big enough to keep a few hundred workers employed.


My apologies. I'm well aware it's no joke. I've developed a very dark sense of humor as a coping mechanism.

This is the same government that has no problems selling out its own citizens for campaign contributions.
32 posted on 08/17/2012 6:42:37 AM PDT by khelus
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To: CORedneck

You’re so right. I once had “Kosher Coke” (that uses beet sugar) given to me by a friend, and it tasted so much smoother than the stuff with corn syrup.


33 posted on 08/17/2012 8:12:18 AM PDT by 92nina
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To: DannyTN
Really? We still have clothing manufacturers here?

Some, but "Made in the USA" tends to mean "Made in a Sweatshop in Los Angeles by Illegal Aliens." But don't expect to see that on the labels any time soon. :)

34 posted on 08/17/2012 8:22:03 AM PDT by Mr. Jeeves (CTRL-GALT-DELETE)
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To: Fledermaus
"If you want to put up a wall and keep our economy within ourselves alone, it might work. But that’s so against the reason the USA exists, IMHO."

The first clue that your opinion is wrong should be in looking at the protective tariffs the founding fathers put in place.

America does stand for freedom. Allowing a communist government like china to take 90% of the profits of it's firms, while keeping it's people in poverty, so they can undercut our prices, and use the profits to buy our manufacturing know how and debt is NOT in Freedom's interest.

We have to keep our own country strong in order to help others. Our first priority is to America. Founding fathers understood that.

35 posted on 08/17/2012 8:45:09 AM PDT by DannyTN
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To: Fledermaus
"Yes, the Fed sucks then and now."

I think the FED has done a wonderful job since the Great Depression. And the reason they got in trouble in those early years is that they were trying to emulate a gold standard.

When money supply took off, they thought, this isn't good, we've got to bring it back down. And they did, along with everything else.

The FED is not to blame for the current mess. And anyone who thinks Congress can't borrow money on a gold standard and promise that your kids will repay it in gold, needs to think again.

36 posted on 08/17/2012 8:48:43 AM PDT by DannyTN
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To: Mr. Jeeves

Unfortunately true.


37 posted on 08/17/2012 8:48:55 AM PDT by khelus
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To: DannyTN
We have to keep our own country strong in order to help others...

And tariffs that wiill destroy thousands of small and medium sized American import/export businesses are a good way to do that?

38 posted on 08/17/2012 10:15:18 AM PDT by Mr. Jeeves (CTRL-GALT-DELETE)
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To: Mr. Jeeves
"And tariffs that wiill destroy thousands of small and medium sized American import/export businesses are a good way to do that?"

They won't destroy import/export businesses unless we build manufacturing in their place which will employ many many more people. So yes. It's what the founding fathers did. It's what America did throughout it's history until 1980.

39 posted on 08/17/2012 10:19:05 AM PDT by DannyTN
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To: Mr. Jeeves
"And tariffs that wiill destroy thousands of small and medium sized American import/export businesses are a good way to do that?"

They won't destroy import/export businesses unless we build manufacturing in their place which will employ many many more people. So yes. It's what the founding fathers did. It's what America did throughout it's history until 1980.

40 posted on 08/17/2012 10:19:22 AM PDT by DannyTN
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