If there is a poster child for what is wrong with U.S. farm policy, it's sugar. Through political muscle and campaign cash, the sugar beet and cane producers have had their way over the best interests of consumers, taxpayers, domestic job creation, trade policy and the Everglades. As Congress reopens negotiations on the farm bill and the federal budget, here's one easy way to reduce government, save money and help Americans: Get government out of the business of propping up sugar growers.
The New York Times recently highlighted the absurdity of the U.S. sugar program, a complex system of tariffs, quotas and government buybacks born in the mid 1970s. Candymakers are continuing to flee the country to chase lower sugar costs elsewhere. Many have landed in Canada, where sugar costs half as much, or Mexico, where it costs about a third less. The U.S. Commerce Department estimated in 2006 the sugar program had cost three jobs in the domestic food manufacturing industry for every single sugar-producing job it saved. But the insult is more than lost American jobs. Often foreign manufacturers can import their candies to the United States and still charge a lower price than American-made producers who are paying twice as much for sugar.
Rarely can one government program insult so many for the benefit of so few: an estimated 5,000 large sugar producers. This year a bumper crop of sugar production means taxpayers will spend at least $300 million buying excess sugar to sell at a loss for use as ethanol, or backstopping industry loans. Yet consumers will continue to shell out higher prices than necessary for foods made in America using sugar — an estimated $9 more annually for each person, according to North Carolina State University economist Michael K. Wohlgenant. The high prices also have had another side effect on food manufacturing: The rise of sweeteners such as high fructose corn syrup now under fresh scrutiny as contributors to America's obesity epidemic.
The foolishness of the sugar subsidies isn't limited to food manufacturing. The U.S. Chamber of Commerce backs reforms in part because American tariffs have damaged other trade negotiations with Australia and other countries.
All of that is on top of the environmental havoc wrought by sugar on one of Florida's primary sources of water, the Everglades. Just last year, Gov. Rick Scott announced taxpayers would spend another $880 million to clean up water south of sugar farms. State and federal taxpayers have spent $4 billion to try to restore the Everglades' water flow decades after it was cleared in another government program to help agribusiness.
How do sugar producers — many of whom actually have international sugar holdings elsewhere — continue to win? Money. In the 2012 cycle, American Crystal Sugar, a co-op representing beet farmers, doled out $2.2 million to federal candidates and spent $2 million on lobbyists. That doesn't include millions more contributed by other sugar producers, including Florida's cane growers.
Democratic Sen. Bill Nelson (along with much of the Florida delegation) has been among the beneficiaries of the sugar industry's largesse. Now he sits on the bipartisan conference committee looking to strike a budget deal. He should offer a free-market solution. Republican Sen. Marco Rubio refused to vote to reopen the government and raise the debt ceiling because of his concerns about reducing the federal deficit. He should back up his rhetoric by pushing to end the sugar subsidies. Until lawmakers stand up to Big Sugar, taxpayers will keep propping up the industry, paying more for food and then paying to clean up the environmental mess left behind.