The U.S. sugar program is a complicated bureaucratic mess, limiting the supply of domestic sugar through a web of price supports, market allocations, quotas, and government guarantees that are ultimately covered by taxpayer dollars.
This program, the driving force behind America’s sugar policy, is harmful to American manufacturers, workers, and hardworking families. That’s because, unlike other commodity programs, the sugar program involves the federal government restricting imports to keep domestic prices high and mandating marketing allotments to restrict domestic production.
This unnecessary government intrusion has cost American consumers $2.4-$4 billion per year and has contributed to the loss of 123,000 American manufacturing jobs between 1997 and 2015 – all to benefit a few extremely wealthy sugar processors.
How Does the Sugar Program Operate? U.S. sugar policy consists of four components that, combined, amount to a complex web of tight controls on sugar supplies:
1. Price supports, which enforce a minimum price for sugar in the U.S. domestic market. This makes the domestic price higher than the world market price.
2. Marketing allotments, which are aimed at preventing surplus supplies in the domestic market. Each beet processor and cane mill is under a government-imposed and legally-binding limit on the amount of sugar it is permitted to sell each year.
3. Import quotas (also called Tariff-Rate Quotas, or TRQs) set limits on how much sugar can be shipped to the United States every year from each of 40 countries that exported sugar to the United States 30–35 years ago. Imports above this level are subject to an extremely high tariff.
4. The Feedstock Flexibility Program, established in 2008, mandates that in times of surplus, the government must buy sugar and resell it to ethanol plants at a loss. This comes at the expense of taxpayers, who as consumers are already paying more for sugar than they should.
For years Congress has missed opportunities to reform the U.S. sugar program. This outdated and outrageous program has not been modernized in 80 years. It is a rigged system that protects a concentrated group of 13 mega-processors at the risk of American small businesses and workers.
This sugar shakedown is baked into nearly every food, snack and treat, which results in zero benefit for the American consumer. The U.S. sugar program forces manufacturers to pay twice as much for sugar as the rest of the world, putting American small businesses at a competitive disadvantage when it comes to creating jobs. According to the U.S. Census Bureau, the sugar program killed 123,000 jobs between 1997 and 2015. The American Enterprise Institute estimates that the program costs small businesses and consumers $2.4 – $4 billion a year.
Some in Congress believe that we should wait for agriculture policies in other countries around the world to change before we address this problem here at home. It’s time to stop pretending that the need to reform the U.S. sugar program is about how other countries operate their governments. Right now these mega-processors operate at zero risk year-in and year-out while American small businesses and manufacturers get zero access to an adequate supply of sugar at a fair price and American manufacturing jobs are put in jeopardy.
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