For far too long, domestic producers of sugar have gotten a sweet deal from the federal government.
Thanks to the U.S. sugar program, sugar beet and sugar cane farmers have had the advantage of minimum prices, cheap loans, and tariffs to keep out competitors — all at taxpayer expense.
Tariffs on sugar were some of the first trade regulations introduced by Congress back in 1789. They have existed in some form or another ever since, and were most recently revamped by the 2014 Farm Bill.
Empowered by this law, the Department of Agriculture sets prices on sugar, limits the amount that can be sold, and sells excessive supply at pre-determined prices to ethanol producers to use as fuel. All the while, they offer loans to domestic producers to prop up the price of sugar.
Like much policy in Washington, it was set up with the best of intentions: to protect the American sugar farmer and to keep prices stable. The consequence of that multi-decade arrangement, however, has been higher costs for consumers and domestic businesses that rely on sugar as a base ingredient for their products.
According to the American Enterprise Institute, users and consumers of sugar lose out to the tune of $2.4 billion-$4 billion a year. That directly hurts the thousands of small businesses that rely on sugar’s low prices.
That’s even more reason to ax this archaic government program that props up special interests.
Why the need to act now? More than ever, consumers are demanding an end to the price manipulations that benefit the few at the expense of the many.
Added to that, the Sugar Policy Modernization Act of 2017, currently making its way through the Senate and the House, is due to face a vote in the coming months. The bipartisan Senate bill was sponsored by Sens. Jeanne Shaheen, D-N.H., and Pat Toomey, R-Pa.
In the House, the bill was introduced by Reps. Virginia Foxx, R-N.C., and Danny Davis, D-Ill. Foxx called the sugar program the perfect example of “crony capitalism” that unfairly penalizes consumers.
“The way our current system is set up, taxpayers and manufacturers bear all of the risks in the form of bailouts, uncertainty and shortages, while the sugar industry reaps guaranteed rewards,” said Foxx in a statement in November.
Much of the opposition to this bill, and the previous efforts to reform sugar subsidies, have come from domestic producers afraid of foreign competition.
But fear of a cheaper commodity isn’t a good enough argument to distort the market at the expense of consumers and taxpayers.
According to the Congressional Research Service, the program costs an average of $100 million a year to maintain, despite the Department of Agriculture’s explicit promise that it should run at no cost to the government.
No matter how the numbers are tallied up or funds diverted, however, it’s American consumers and businesses who are hit the hardest. And farmers overall aren’t helped, either.
Small companies that rely on sugar as a basic ingredient for their products, such as chocolate or sweets, must pay higher costs in order to get their hands on the commodity. Those costs are eaten up by consumers.
No doubt, sugar producers are an important part of the economy. And they deserve to bring their products to market, along with every other company that wants to offer that to buyers. But picking winners and losers from the comfort of a Washington, D.C., government office isn’t how we’re going to benefit consumers who desire lower prices and better products.
While the origins of sugar subsidies may have been noble, we can no longer afford to sustain this policy.
Consumers should be very clear: End the sweet deal for the special interests in Washington and get the government out of the sugar business for once and for all.
Yaël Ossowski (@YaelOss) is a contributor to the Washington Examiner's Beltway Confidential blog. He is deputy director at the Consumer Choice Center and a senior development officer at Students For Liberty.
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