Opinion

Proposed ‘Fixes’ to Sugar Program Will Only Hurt Consumers

Only a handful of Americans alive today recall that sugar was the first food product to be rationed during World War II, and the last to be taken off the ration list. Though the Axis has been long vanquished, the war over America’s sugar program rages to this day, pitting sugar producers against food manufacturers and the candy industry.

With a new farm bill looming on the horizon, food manufacturers and confectioners have formed a vocal and active coalition, the Alliance for a Fair Sugar Policy. The members of AFSP are currently pushing legislation titled the Sugar Policy Modernization Act (H.R. 4265/S. 2086) which they claim will bring “competitiveness” back to America’s sugar market, and lower prices for consumers. In reality, undermining America’s current low-cost sugar program will bring nothing but risk to consumers through wild price swings and unpredictable supply disruptions.

Yes, American sugar policy is built on price supports and limits on imported sugar that for decades have drawn attacks by those claiming to champion free markets. But while the intention to instill the free market onto the sugar industry is noble in theory, the truth is there exists no free-market for sugar and no unilateral piece of legislation will make it otherwise.

The worldwide sugar market is the most distorted food commodity on the planet, with giant sugar producing nations such as Brazil, Mexico, India, Thailand and Indonesia providing billions in subsidies to their domestic producers. Their goal is nothing short of conquering the world’s largest sugar market here in the United States by flooding our food aisles with artificially cheap sugar, then spiking the price when supplies fluctuate in their favor. This is hardly a free-market blueprint.

What is concerning is that this same food coalition is claiming their crusade will benefit U.S. consumers and workers, even pointing to a government statistic as proof that sugar alone is causing workers to lose their jobs. This is patently absurd, and underscores why their policy prescriptions are as wobbly as a two-legged chair.

First, the price consumers pay for sugar is actually a whopping 44 percent lower today than it was in 1985, when adjusted for inflation, while the price of a candy bar has more than tripled. Further, a candy bar costing $1.49 today has about 2.3 cents of sugar, making the howls from the confection industry over our sugar policy especially ridiculous.

Second, the United States lost over 5 million manufacturing jobs from 2000 to 2016, yet the food coalition points to job losses averaging about 6,000 a year in food manufacturing as evidence that the U.S. sugar policy is weighing them down. Of course any job loss is an unfortunate occurrence, but job losses they cite are quite paltry given the broader trend during that time period. The cost of labor, regulations, transportation, equipment, and on and on have all been subject to inflationary pressure, yet somehow sugar seems to be the cause of all their problems.

The food coalition complains that they pay twice as much for sugar as their competitors in the global market, but again the “global market” is heavily subsidized by global governments and their taxpayers. If the U.S. sugar program setting import limits were to be eliminated, they would be the benefactors not of free-market sugar, but of a honey pot of cheap, heavily subsidized sugar being dumped on our shores. This of course would save them a bundle, but would also devastate U.S. sugar growers and lead to utter chaos for our markets here at home. We know this because it has been tried already, to disastrous results.

In 2006 the European Union was seduced by the “free-market” sugar siren, reforming its sugar policy to much fanfare.  But in the months that followed, 83 domestic sugar mills closed and 120,000 jobs were lost. But the major harm was felt across the food supply economy. According to a major report in its aftermath:

“After dropping 22%, bulk refined sugar prices in Europe are now some 10% above what they were before the reform… Since the end of 2010, the EU sugar market has been characterized by high and volatile prices, and a shortage of supplies — thus mirroring world market gyrations. The sugar users who lobbied hard for the reform — companies such as Nestle, Coca Cola and Kraft — are complaining just as loudly as before.”

Since then the EU has changed course and reintroduced some $665 million a year in subsidies to save its domestic industry, licking its wounds and learning a lesson that depending on the grossly distorted world sugar market brings unneeded risks, higher costs, and supply shortages.

A better way to level the playing field is currently before Congress, Rep. Ted Yoho’s (R-Fla.) Zero-for-Zero legislation, which eliminates U.S. quotas and price supports if other nations agree to do the same. This is the only viable solution to creating a true free-market in sugar, with open competition that rewards the best producers without favoritism or handouts. If free-marketers are truly looking to end the never-ending sugar war, then Zero-for-Zero is the answer.­

 

Gerard Scimeca is an attorney and vice president of Consumer Action for a Strong Economy, a free-market oriented consumer organization.

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