Sugar Subsidies Cost U.S. Jobs
August 19, 2002
U.S. subsidies to sugar growers are bad policy and bad economics, observers say. The loan guarantees Washington gives growers cost consumers $2 billion a year and are now driving manufacturing jobs out of the country.
- Kraft Foods is moving Life Savers production to Canada -- costing 600 jobs -- because Canada doesn't prop up prices to protect a handful of domestic sugar growers.
- Kraft's Montreal plant pays just over half of U.S. price for sugar, leading to an annual savings of nearly $10.
- Brach's Confections is shutting down a Chicago plant, throwing 1,100 out of work.
- Ferrara candy's expansion is focusing on new plants in Canada, Mexico and other foreign locations.
For years, Washington has given the industry low-interest loans and curbed imports of foreign sugar. When the growers default on the loans, the government has to accept repayment in sugar.
- Two years ago, processors dumped $400 million worth of sugar on the government -- and just storing it cost taxpayers $1 million a month.
- The Congressional Budget Office estimates defaults on sugar loans could cost $800 million during the next 10 years.
- The new 10-year, $200 billion farm bill, repeals a requirement that sugar producers who default on their loans pay a modest forfeiture penalty -- costing the Treasury $500 million.
Since 1990, sugar growers have contributed more than $18 million to political campaigns. They don't include just sugar cane growers in, but sugar-beet growers across the Midwest and West and corn growers as well. Artificially high prices for sugar create a market for corn syrup as a substitute in products ranging from soft drinks to bakery products.
Source: Editorial, "Sugar Lobby's Clout Threatens Economic Decay," USA Today, August 19, 2002.
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