As Congress begins to consider the latest Farm Bill, members of Congress have a chance to make long overdue reforms to the sugar program.  The current sugar program was originally intended as a temporary relief program during the Great Depression but has since become permanent.  By using tariff rate quotas and other protectionist measures, the program benefits sugar producers while industries that use sugar and American consumers face higher prices.  Reforming or replacing the sugar program would be a win for consumers who have already been facing inflation for years. 

The modern sugar program was created in 1934 when the Jones-Costigan Amendment was signed into law as part of the Agricultural Adjustment Act.  This legislation was intended to be a temporary measure to stabilize the price of sugar during the Great Depression by utilizing subsidies, production quotas, price supports, and import tariffs.  These measures were made permanent in 1937 when the Sugar Act of 1937 was signed into law.  This system was largely unchanged until 1974, when the price of sugar tripled, and the program ended.  In the 1981 Farm Bill, these price supports were once again implemented and have continued to this day.

 The most critical aspect of the sugar program is the tariff rate quota that is imposed on imported sugar.  This quota requires that 85 percent of sugar purchases be bought from domestic producers and limits the amount of sugar that can be imported from 40 different countries.  Any sugar that is imported beyond the quota is subject to a tariff of 15.36 cents per pound for raw sugar, and 16.21 cents per pound for refined sugar. 

Government intervention in the sugar industry is not only limited to tariffs.  The Feedstock Flexibility Program requires the Department of Agriculture’s Commodity Credit Corporation to buy sugar from domestic producers and then re-sell the sugar to bio-energy companies to avoid sugar loan collateral under the sugar program.  This system makes the federal government both a buyer and seller of sugar and gives sugar producers another layer of protection. 

While this system is a sweet deal for producers, it is a loss for consumers, taxpayers, and the government.  Consumers pay higher prices for goods containing sugar because of the limited supply, and the government does not receive increased revenue because it typically re-sells the sugar at a loss.  Under this regime, American consumers pay double the price of sugar that consumers in other countries around the world pay.  A February 2002 American Enterprise Institute report found that the sugar program has also caused the “losses of 17,000 to 20,000 jobs in the food processing and confectionary industries.”

Congress should reform or replace the U.S. sugar program when they vote to reauthorize the Farm Bill, which is set to expire on September 30, 2024.  Reforms to the sugar program have been proposed for many years from both sides of the aisle, including in CAGW’s Prime Cuts report.  The sugar program continues to impose artificially high costs on consumers and small businesses for the benefit of sugar growers and producers.  As consumers face persistent inflation, now is the perfect time for Congress to enact changes that will lower prices, and shift the burden of bolstering the current sugar program away from the backs of taxpayers.