Federal policy coddles the U.S. sugar industry. The result is higher consumer prices — and fewer jobs in the U.S. food industry. Still, for many years Big Sugar could claim the program was designed to avoid any direct expenditure of taxpayer funds and that it had achieved that goal.
Not anymore. The Agriculture Department lost $280 million on the sugar program in fiscal year 2013, with more losses expected next year. An import surge from Mexico has driven down U.S. sugar prices — to the point where it’s profitable for processors to forfeit the sugar they posted as collateral for government loans and keep the cash. Stuck with mountains of excess sweetener, the government has two choices: hoard it until prices go up or sell it at a huge loss to the few ethanol makers willing to take it.
Even before this latest evidence of the sugar program’s irrationality, bipartisan critics in Congress had been trying to add reforms to the next five-year farm bill. They failed.
Big Sugar argues that ending U.S. sugar protections would be unilateral disarmament, since Mexico subsidizes its industry. That didn’t matter much as long as Mexico had to compete with other sugar exporters for an allotted quota of the U.S. market. But today, a provision of the North American Free Trade Agreement allows unlimited imports from Mexico. Now, the sugar lobby says, the United States should adopt a “zero-for-zero” policy: We’ll stop fiddling with the sugar market when everyone else in the world does the same.
It sounds reasonable. Economics 101 says everyone would be better off if these controls were abolished.
Alas, Politics 101 says that’s not going to happen soon, so “zero-for-zero” amounts to perpetuating policies that benefit U.S. producers at the expense of food processors and consumers.
The Washington Post (Nov. 26)