Now is the Time to Reform or Replace the Sugar Program
Congress has a chance to deliver long overdue reforms to the sugar program. The current sugar program was intended to be a short-term solution but has evolved into a permanent government program that wastes taxpayer dollars and raises prices for consumers. The sugar program puts the sugar industry ahead of consumers and reforming or replacing it is an easy way for Congress to deliver relief to consumers and taxpayers.
In an effort to stabilize sugar prices during the Great Depression, the Jones-Castigan Amendment was signed into law as part of the Agricultural Adjustment Act in 1934 and allowed the federal government to utilize sugar subsidies, production quotas, price supports and import tariffs. The program was made permanent in the Sugar Act of 1937. This system was kept in place with few changes made until 1974, when the program was ended because the price of sugar tripled. However, in 1981, Congress brought back sugar price supports in the Farm Bill and they have been in place ever since.
The most crucial component of the sugar program is the tariff rate quota on imported sugar, which requires that 85 percent of sugar purchases be made from domestic producers and limits how much sugar can be imported from 40 different countries. Imports that exceed the quota are subject to a tariff of 15.36 cents per pound for raw sugar, and 16.21 cents per pound for refined sugar.
Tariffs are not the only form of government intervention in the sugar industry. The Feedstock Flexibility Program requires that the Department of Agriculture’s Commodity Credit Corporation buy excess sugar from domestic producers and then re-sell the sugar to bio-energy companies, usually at a loss, to produce ethanol and prevent sugar loan forfeitures. Under this scheme, the federal government is both the buyer and seller of sugar. Because the government does not generate much revenue from re-selling sugar, this scheme is great for sugar producers but terrible for everyone else.
The sugar program might be a sweet deal for producers but leaves a sour taste for consumers and taxpayers. Due to the limited supply of sugar, Americans pay double the price of sugar compared to consumers in other countries around the world. According to a February 2022 American Enterprise Institute study, the sugar program induced “losses of 17,000 to 20,000 jobs in the food processing and confectionary industry.”
The sugar program continues to artificially raise prices, which benefits sugar producers and growers to the detriment of consumers and small businesses. This regime is long overdue for reform or replacement and should be a top priority for members of Congress when they vote on reauthorizing the Farm Bill this year.
