American sugar: A not-so-sweet deal
First, the government decides how much domestic sugar can come to market. It then sets the price significantly higher than prices on the world market. This higher price would, of course, open sugar producers to international competition. So, to avoid that fate, the government restricts sugar imports. And if the government incorrectly predicted the demand for sugar, leaving a surplus? That’s fine, because the feds will then buy up the excess sugar and sell it at a loss to ethanol producers
This Soviet-style central planning has got to go. The increased cost of sugar affects everyone through higher prices , to the tune of $14 billion in excess costs over the last four years. Even more disastrously, it’s estimated that increased sugar prices cost 112,000 jobs between 1997-2009, particularly in manufacturing industries that use sugar as an input. At a time when unemployment remains high and workers’ hours are being cut, it’s simply unfair to prop up one industry at the sake of another.
That’s why this week the R Street Institute was proud to join with a coalition of think tanks and grassroots organizations to call for sugar program reform. Americans should no longer be subsidizing fewer than 6,000 farms through their tax dollars, particularly at the cost of jobs. Rather than increasing government spending to stimulate manufacturing employment, the government should start with removing federally-created barriers to employment, beginning with the sugar program.