NCPA - National Center for Policy Analysis

It's Time to End the Job-Killing U.S. Sugar Policy

May 30, 2012

In a letter to House of Representative leaders, a group of lawmakers from both parties call U.S. sugar policy "the last of the command-and-control commodity programs that has yet to be reformed."  What they are attacking specifically are laws that artificially increase the price of the commodity in the United States, thereby transferring wealth directly from consumers to a small, special group of producers, says Investor's Business Daily.

Perhaps the most odious violation of free trade principles, the United States' sugar policy is the quintessential example of a standard trade barrier.

  • The American sugar industry benefits from laws that place maximum quotas on the importation of foreign sugar, thereby allowing domestic producers to control supply.
  • In so doing, these producers are able to drive up the price of sugar, exploiting consumers who pay marginally more for sugar (and everything sugar is an input into) for enormous profits.
  • In Canada, the price of sugar is less than half the U.S. price, and in Mexico, it is two-thirds the American rate.
  • An Iowa State University study has found that the federal sugar program costs U.S. consumers roughly $3.5 billion a year.

Furthermore, in a fragile economy with record-high rates of persistent unemployment, it also becomes critical that the government's current sugar policy has been shown to cost thousands of jobs.

  • According to that same Iowa State University study, these sugar policies also result in 20,000 American jobs lost.
  • This can be seen in economic choices of major producers that rely on sugar such as Kraft, Hershey and Brach's, each of which have moved some operations overseas to take advantage of lower prices.
  • While the sugar policy undoubtedly helps some sugar farmers to stay in business (thereby preserving jobs), the Commerce Department has determined that for every growing or harvesting job the sugar program saves, nearly three sugar-related manufacturing jobs are lost.

The above-mentioned letter written by lawmakers was the work of a bipartisan group of 22 congressional members.  While America's sugar policy has survived for decades despite overt criticism, it remains possible that this new push could do away with the outdated policy that costs consumers so much.

Source: "It's Time to End the Job-Killing U.S. Sugar Policy," Investor's Business Daily, May 23, 2012.

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