Skip to comments.US Sugar Policy: Not So Sweet for the Economy
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 governments 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.
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 governments inflation of sugar prices. Taxpayers too, shoulder the burden of the governments 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.
Read more: http://atr.org/sugar-policy-sweet-economy-a7127#ixzz23jzkcmS9
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.
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.
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.
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..
Bump for later
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.
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.
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.
That won’t work for everything. Under the Canada-US Free Trade Agreement, goods cross the border duty-free.
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?
They are fixin’ to close more than one small American business.
Really? We still have clothing manufacturers here?
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.
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.
I was paying the premium for pepsi throwbacks. And then Pepsi came out in favor of gay rights. Now I’m drinking HFCS again.
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
No premium for Pepsi Throwback here- we pay less for sugar :-)
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