US NEWS: Sugar Price Supports Are Not So Sweet

US News: Written by Michael K. Wohlgenant. September 5, 2014.

Like many lobbies, the American Sugar Coalition wants to have its cake and eat it too. The sugar lobby wants to make sure its members receive prices for their product that in most years are close to double what's standard on the open world market. But the lobby also wants to make sure that the sugar program's costs to the average American household and the U.S. economy are hidden from plain sight.

Recently, however, much to the sugar lobby’s consternation, there has been considerable discussion about the direct and highly transparent costs to the federal government of the sugar program due to defaults on government loans by sugar processors. In 2013, the U.S. Department of Agriculture spent $107 million buying sugar to increase prices to producers after processors defaulted on $172 million in what are known as non-recourse loans from the government. The processors borrow money from the government using their sugar inventories as collateral at a guaranteed loan rate of 22.9 cents per pound of sugar.

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