The sugar program that ate our budget

Published 7:23 pm Sunday, November 2, 2014

There’s the sugar rush, then the sugar crash. If you’re feeling a little weak and lethargic after the Halloween binge on treats, it’s not your blood sugar levels — it’s the monstrous federal sugar subsidies that are killing jobs and driving up prices.

“Your Halloween candy is costing you more than it should — because of a government program,” the Heritage Foundation reported. “For decades, the federal sugar program has artificially kept the price of sugar excessively high. According to the most recent data from the U.S. Department of Agriculture, it cost 37.5 cents to buy a pound of wholesale refined beet sugar in the United States, yet it only cost 19.2 cents for a pound of refined sugar on the world market.”

According to the New York Times, that program is actually “a combination of import restrictions, production quotas and loan programs dating to the 1930s, all designed to keep the price of American sugar well above that of the world market.”

Why does it continue to exist, if it dates back to the 1930s?

“According to some of the program’s proponents, U.S. federal sugar policy protects jobs that would largely disappear without state intervention,” Heritage explained. “But a study conducted by the U.S. Department of Commerce found that ‘[f]or each one sugar growing and harvesting job saved through high U.S. sugar prices, nearly three confectionery manufacturing jobs are lost.'”

The American Sugar Alliance, the industry’s lobbying group, claims that “142,000 U.S. sugar workers” are at risk, including 3,409 in Texas.

But that assumes that if the federal government stepped out of the way, every single sugar job would go poof. That wouldn’t necessarily happen, of course. The free market encourages adaptation. The quotas and guarantees the government provides to growers have discouraged efficiency; it’s quite likely those sugar producers could find ways to make their product more competitive with world markets.

Yet assuming that every one of those jobs went away, the Commerce Department shows that more jobs would be produced in the confectionery industry.

Artificially high sugar prices are now driving such jobs out of the country.

“Atkinson Candy Co., a peppermint candy manufacturer, and Jelly Belly Candy Co. have both moved large portions of their businesses to Guatemala and Thailand respectively,” Heritage explains. “That same Commerce Department study found that ‘[f]or the confectionery industry in particular, evidence suggests that sugar costs are a major factor in relocation decisions because high U.S. sugar prices represent a larger share of total production costs than labor.'”

That doesn’t seem to matter to federal bureaucrats. Last week, they announced new tariffs on Mexican sugar.

“The government said Monday it would impose additional tariffs on Mexican sugar imports as high as 47.26 percent after the Commerce Department preliminarily determined that Mexican sugar producers had dumped the sweetener in the U.S.,” the Wall Street Journal reported.

That sent sugar prices higher — just in time for the holidays.

“The federal government’s current policies benefit a relatively small number of well-connected sugar producers — and that’s one Halloween trick that hurts most of our wallets,” Heritage said.