The Cato Institute has an article on why it is time for sugar subsidies to be repealed:
The sugar program is essentially a producer cartel run out of Washington. The Agriculture Department operates a complex loan program to guarantee sugar growers certain prices, which it enforces with import barriers and domestic production controls.
The import barriers prevent cheaper foreign sugar from putting downward pressure on domestic prices. Current rules restrict sugar imports to about 15% of the American market. By contrast, when rules were looser prior to the 1980s, sugar imports accounted for half the U.S. market.
In the domestic market, the Agriculture Department decides what total sugar production ought to be and allots 54% of production to beet sugar and 46% to cane sugar. The department then allots each sugar company a specific production quota. According to the Government Accountability Office, 42% of sugar program benefits go to just 1% of sugar growers.
Most sugar beet production is in Minnesota, Idaho, North Dakota, Michigan and California. Most sugarcane production is in Florida and Louisiana. Not surprisingly, policymakers from those states usually block sugar reform. Nonetheless, policymakers from Illinois and other such states, which have food companies damaged by high sugar prices, are challenging the current program.
High sugar prices harm manufacturers of candies, chocolates and breakfast cereal. A 2006 study by the Commerce Department found that for each sugar industry job saved by the sugar program, nearly three food manufacturing jobs are lost. The study found that:
- Employment in food companies that use substantial amounts of sugar is declining. Imports of food products that contain sugar are growing because it is not competitive to make those products in the U.S.
- Numerous companies have relocated to Canada and Mexico, where sugar prices are much lower.
- Chicago, once the nation’s candy manufacturing capital, has lost thousands of jobs. In 2004, candy maker Fannie May closed its Chicago factory and Brach’s moved its Chicago candy production to Mexico.
- Michigan took a hit in 2002, when Kraft moved its 600–worker LifeSavers factory to Canada in search of low–cost sugar.
- Hershey Foods closed plants in Pennsylvania, Colorado and California and relocated them to Canada as well.
Another great example of what happens when the egomaniancs and corporate shills in Washington muck around in the free market. All federal subsidies need to be repealed, not just the sugar subsides. But you have to start someplace, so it might as well be sweet.
Here’s hoping the Democrats do the right thing and kill this thing.
