Sugar Program: High Prices, Short Supplies

May 4, 2011

Advocates of the U.S. sugar program like to claim they are protecting our “food security.” It turns out that trade barriers deliver higher prices for consumers while making our food supplies LESS secure.

According to a story in the Wall Street Journal, titled “Sugar Squeeze in U.S.,” bad weather has curbed the amount of sugar cane produced in Florida and sugar beets in the Midwest. When combined with restrictive import quotas that virtually guarantee U.S. producers 85 percent of the domestic market, domestic sugar prices could soon spike upward.

Americans currently pay more than 36 cents for a pound of sugar, more than 50 percent above the world price. The sugar program not only imposes extra costs on American consumers but also hurts U.S. small businesses and industries that use sugar in their final products, such as bakeries, family restaurants, cereal companies, and confectioners.

Rising prices and constricted domestic supplies have prompted a bipartisan coalition of lawmakers in Congress to introduce legislation to dismantle the anti-competitive sugar program and to restore the freedom of Americans to buy sugar at global prices. A bill has been sponsored in the Senate by Richard Lugar, R-Ind., titled “The Free Sugar Act of 2011.” A companion bill has been sponsored in the House by freshman Republican Bob Dold, whose suburban Chicago district has seen its candy industry decimated by high domestic sugar costs; and Democrat Earl Blumenauer, a long-time critic of U.S. farm programs and other trade barriers that disproportionately hurt poor families, such as our scandalously high tariffs on imported shoes.

In a Dear Colleague letter distributed last week, Dold and Blumenauer wrote,

According to a Commerce Department study, for every job protected by our antiquated sugar program, three American manufacturing jobs are lost. By eliminating U.S. sugar price controls and quotas, Congress can reverse this wasteful policy. With accelerating U.S. manufacturing job losses over the past few decades, Congress should no longer maintain an old and inefficient policy that destroys good-paying American jobs.

Here is a Cato op-ed and a Cato Capitol Hill Briefing, both from October 2009, on why the sugar program needs to be abolished.

See this Cato essay for more on agricultural regulations and trade barriers.


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