Explainers Governance

The High Price of Federal Sugar Policy: What’s the true cost of this “free” program?

by Nan Swift

Sept 28, 2023

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Author

Nan Swift

Resident Fellow, Governance Program

What Congress Can Do

Stop picking winners and losers—in this case, sugar producers and everyone else.

Enact reforms that increase competition and reduce cronyism.
This could range from repealing the sugar program altogether, to treating sugarcane and sugar beets like other traditional crops, to passing bipartisan, commonsense legislation that would decrease taxpayer liability for loans to sugar producers, increase flexibility for producers and repeal the Feedstock Flexibility program.

Ensure access to a generous sugar supply to avoid shortages or more painful price hikes for already strapped consumers.

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Summary

The modern sugar program is a protectionist racket benefiting politically favored domestic producers at the expense of consumers. The U.S. Department of Agriculture (USDA) administers a sticky mix of top-down policies that strictly control the domestic sugar supply, artificially boosting prices by restraining production and shutting out most imports. The program claims to operate at no cost to taxpayers, but this supposedly “free” program comes at a high price for other Americans and our economy.

What’s Happening

Despite slowing inflation, consumers’ wallets continue to be stretched by basic expenses, like food. Experts cite a broad litany of underlying causes, from high energy and labor costs to persistent supply chain disruptions and global conflicts. Most of these problems are outside Washington’s immediate control or are one facet of a larger issue. However, there is one part of the food price puzzle that is wholly a monster of D.C.’s own making: the federal sugar program.

Read the rest of the explainer here.