NCPA - National Center for Policy Analysis

Sweet Deal For Sugar Growers, Raw Deal For Consumers

May 23, 2000

Congress' coddling of the U.S. sugar industry is a prime example of how government meddling can up-end markets, impose higher costs on consumers and fleece taxpayers -- while lining the pockets of the wealthy and politically well-connected, say economists.

Here's how the ruse works:

  • The government keeps prices paid to U.S. sugar growers far above the world price, primarily by severely limiting imports of lower-priced foreign sugar.
  • Protected from competition, U.S. growers plant far more sugar than the country can use.
  • So as the abundance drives prices below a set level, growers who have put up their sugar as collateral for federal loans are entitled to forfeit their crops to the government -- thereby keeping the loan money and sticking the U.S. Treasury and taxpayers with the loss.
  • To stave off up to $550 million in loan defaults, the Agriculture Department this month began spending $60 million to buy up 150,000 tons of sugar -- in a desperate effort to push up prices charged U.S. consumers.

Moreover, the industry and its supporters in Congress are pressuring the government to buy at least that much again.

So the public is paying millions in taxes solely for the purpose of making sure it pays inflated prices for soft drinks, cookies, candies and other sweetened products, analysts point out.

To make sure that the process continues, the sugar industry funnels $1.5 million a year to its friends in Congress.

Source: Editorial, "Cut Sugar From Congress' Diet," USA Today, May 23, 2000.

 

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