Sugar, ah, Funny Money!

By William M. Christian

April 2016 WasteWatcher

In a March 2013 post on Swineline, CAGW took its first crack at a parody of the 1969 bubblegum classic, “Sugar, Sugar.”  Today’s title riffs on the hit song’s first verse (Sugar, ah, honey, honey!), taking the jibe one step further.  Readers can decide for themselves whether the not-so-veiled indictment (“funny money”) pertains to either the $49 million in federal campaign donations (more than any other crop sector except tobacco) that keep the sweet supports in place or the exorbitant amounts of taxpayer dollars that are lost on this boondoggle.

According to the Coalition for Sugar Reform, the sugar program now has an average consumer cost of $3 billion a year.  On March 24, 2016, the Congressional Budget Office released its latest Baseline for Farm Programs, forecasting that the sugar program will cost taxpayers an additional $138 million over the next 10 years.

A Depression-era relic of top-down, government-driven economies, the sugar program is in desperate need of reform.  But, unlike virtually all of the other commodity programs that were subject to numerous hearings and debate, the U.S. sugar program was the only commodity program not reformed in the 2014 Farm Bill.  As U.S. farm policy has evolved toward a more free market structure, the sugar industry has regressed:  with its allies in Congress, it has forced the market into more restrictive government control.

The fact that sugar alone enjoys such a “hands off” status with Congress is mind-boggling, considering the cuts and reforms imposed on food assistance and other commodity programs.  That is, until one recognizes that the sugar program is perhaps the boldest example of unbridled crony capitalism, with sugar money flowing freely from a handful of processors and their pals through the halls of Congress into a diverse collection of campaign coffers.

What makes the seeming invincibility of the sugar program all the more remarkable is that, when the U.S. sugar lobby’s generous political contributions (to both sides of the aisle) are removed from the equation, there are enough points of contention to anger both Democrats and Republicans equally.

For low-income consumers, the sugar program is a regressive food tax.  While upper-income Americans spend 8 percent of their incomes on food, American households in the lowest-income quintile spend more than 36 percent of their income on food.  The program is a multi-billion dollar hidden tax on business as well as consumers.  By raising costs throughout the food chain, the sugar program is estimated to increase costs by $3 billion annually.  These costs must be paid either by consumers, which reduces their disposable incomes, or by business, which hampers their ability to create jobs.

Moreover, even for those who support the subsidization of certain sectors of the economy in the interest of protecting domestic jobs, the sugar program is an indefensible example of corporate welfare.  The program primarily benefits wealthy plantation owners and farmers, going to only 14 sugar processors and fewer than 5,000 sugar crop farms in a handful of states.  At an average consumer cost of $3 billion annually, that equals $700,000 per farm.

Worse, the sugar program is a job killer.  According to the U.S. Department of Commerce, three jobs are lost for every job saved by sugar subsidies.  Between 1997 and 2014, sugar-using industry jobs in the U.S. declined by 18 percent, and the Coalition for Sugar Reform believes that outdated sugar policies are likely behind much of that decline.  The disparity is a stark one: the sugar program puts at risk an estimated 600,000 jobs in sugar-using industries in all 50 states, while the benefits redound to the minuscule number of processors and plantation owners in only a handful of states.  According to a 2014 survey by the Census Bureau, the sugar-using industry, which once employed more than 700,000 American workers, has experienced a decline of 132,000 jobs.

Sugar supports harm the environment, while taxpayers pay for two-thirds of the cleanup costs.  Artificially inflated sugarcane production in the Everglades is implicated in the decline of that unique ecosystem.  According to a 2012 report commissioned by The Everglades Foundation, an estimated 76 percent of the phosphorus entering and polluting the Everglades is from agriculture, primarily from sugar production.

As noted earlier, the sugar program is anathema to free-market capitalism.  Federal bureaucrats dictate how much sugar can legally be sold by sugar processors (literally, to the pound), transforming the sugar program into, essentially, a government-sanctioned cartel.  These policies have placed a stranglehold on the availability of sugar in the U.S. market, to the detriment of everyone, except the processors and producers.

In the face of these inconvenient facts, the Big Sugar fat cats have trotted out another red herring.  They have tried to appeal to (otherwise free-market oriented) Republicans by pushing the so-called “zero-for-zero” policy in sugar, whereby the U.S. would agree to end its sugar program if foreign competitors would simultaneously end their government subsidy programs.

As former Rep. and Club for Growth President Chris Chocola (R-Ind.) so cleverly stated, “The argument made by supporters of [zero-for-zero] is the same as saying we won’t stop banging our head against the wall until everyone else stops banging their heads against the wall.  That sort of protectionist reasoning is not in line with free market principles.” 

The “zero-for-zero” proposal is just another of the sugar industry’s clever ways to delay and obfuscate real reform.  Don’t let all this sweet talk sugarcoat the bitter pill that American taxpayers are forced to swallow:  unjustifiably high prices for a commodity that is found in virtually everything that Americans consume.  Not even Mary Poppins, with limitless spoonfuls of sugar, could make that so-called medicine go down.

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