Exclusive: Corn Refiners Declare War on Sugar, Conservative Groups Jump Onboard

Washington Post
By: Tom Hamburger and James Hohmann

Excerpt: For decades, it’s been an unspoken rule among Washington’s agricultural lobbyists: advocates for one crop do not attack other crops, so that everyone’s benefits can be protected.

But a leading member of the traditionally united community plans to do just that: the Corn Refiners Association is about to invest heavily in an effort to unwind the lucrative breaks afforded to sugar, which are among the most generous in U.S. agriculture.

… While other crop subsidies have withered, Washington’s taste for sugar has been constant. The sugar program, which has existed in various forms since the 1930s, uses an elaborate system of import quotas, price floors and taxpayer-backed loans to prop up domestic growers, which number fewer than 4,500.

Sugar’s protected status is largely explained by the sophistication and clout of a small but wealthy interest group that includes beet farmers in the Upper Midwest, cane growers in the South and the politically connected Fanjul family of Florida, who control a substantial part of the world sugar market. That mix of factors has led to an eclectic coalition on sugar’s side, from Sen. Marco Rubio (R-Fla.) to Sen. Al Franken (D-Minn.).

“While every other farm support program has received multiple rounds of reforms, big sugar has not been touched,” said John Bode, CEO of the Corn Refiners group.

Read the full piece here.

House Introduces Sugar Reform Bill

American Shipper Magazine
By: Chris Gillis

Excerpt: The U.S. House introduced the 2015 Sugar Reform Act, which promises to reform the country’s 1930s-era sugar trade program.

The bill is the companion legislation to S. 475, which the Senate introduced on Feb. 12.

The Sugar Reform Act would provide the U.S. agriculture secretary with the flexibility to adjust marketing allotments and import quotas to stabilize the U.S. sugar market when necessary.

“We ask lawmakers to think of their constituents, the American consumers and taxpayers who continue to foot the bill for the U.S sugar program, which the Congressional Budget Office forecasts will cost taxpayers $115 million over the next 10 years,” said the Coalition for Sugar Reform in a statement. “It is time to address the shortfalls of America’s protectionist sugar policy. We call on lawmakers to support this legislation.”

Read the full article here.

Senate Introduces Bill to Reform Sugar Program

American Shipper Magazine
By: Chris Gillis

Excerpt: A bipartisan group of U.S. senators introduced legislation Thursday that would reform a Great Depression-era national sugar program.

The legislation will give the U.S. Department of Agriculture’s secretary the flexibility to adjust marketing allotments and import quotas as needed to stabilize the U.S. sugar market.

The Coalition for Sugar Reform, which supports the 2015 Sugar Reform Act legislation, said the current U.S. sugar program consists of price supports, marketing allotments and tariff-rate quotas that “manipulate the U.S. market to limit the amount of sugar available while also guaranteeing a minimum price for sugar – all to prop up the already profitable U.S. sugar producers.”

The industry coalition said the current sugar policy costs consumers up to $3.5 billion annually in the form of a hidden taxes and taxpayers nearly $300 million in fiscal year 2013 due to loan forfeitures, implementation of the sugar program’s Feed Stock Flexibility Program and other government actions. The Congressional Budget Office, in its January 2015 Baseline for Farm Programs, forecasts the U.S. sugar program will cost taxpayers an additional $163 million over the next 10 years.

Read the full article here.

Senators Launch Fresh Bid for Sugar Policy Overhaul

By: Chris Prentice

Excerpt: Three senators on Thursday introduced a bill to overhaul the U.S. government’s controversial sugar program, aiming to lower price-support levels and change domestic supply restrictions.

The sugar program has cost consumers more than $14 billion since 2008, Democratic Senator Jeanne Shaheen of New Hampshire and Republican Senators Mark Kirk of Illinois and Pat Toomey of Pennsylvania, who introduced the legislation, said in a news release.

Read the full article here.

U.S.-Mexico Sugar Deal Means Higher Prices for Consumers

Washington Post

Excerpt: … As the season of candy canes and chocolate Santas approaches, sugar is selling for 24 cents per pound on the U.S. commodities market, about 9 cents above the world price. This differential is due not to market forces but rather to government intervention. Specifically, U.S. sugar producers persuaded the Commerce Department to threaten Mexican producers with tariffs for allegedly subsidizing sugar exports to the United States. In late October, U.S.-Mexican negotiations produced a preliminary deal under which the United States would refrain from imposing tariffs if Mexico’s industry accepted price and quantity controls on its exports; the expectation that U.S. supplies will tighten accordingly has driven up prices.

On its merits, the U.S. producers’ case against Mexico was, at best, hypocritical. It’s true that the Mexican government owns about a fifth of the country’s sugar industry, which implies a subsidy, though precisely how much is hard to quantify. Yet U.S. producers, though nominally private, have benefited from federal subsidies and protections since the New Deal, including per-country quotas on imports.

Read the full editorial here.

U.S. Sugar Soars Above World Prices

Wall Street Journal
By: Alexandra Wexler

Excerpt: … Sugar is getting dearer in the U.S. even as it is getting cheaper in most other places. Prices in the global market traded near 5½-year lows in September, though they have rallied a bit since. In the U.S. futures market, the sweetener is 58% more expensive than on the global market. …

U.S. sugar prices are typically a few cents higher than the world rate due to government policies that restrict imports and support growers. But the gap blew out this year after the government threatened to slap taxes on imported Mexican sugar at the behest of U.S. growers.

Read the full article here.

U.S. Sugar Policy: Sweet for a Few, Sour for Most

Wall Street Journal
Op-ed By: Burleigh C.W. Leonard, Former Special Assistant to President Reagan for Food and Agriculture

“The United States and Mexico signed agreements last week that would restrict the amount of sugar Mexico can export to the U.S. The deal has been praised for avoiding a trade war, but it is symptomatic of a policy that imposes a heavy toll on the economy. It also undermines the U.S. government’s position in current international trade negotiations. …

“What makes this result so ironic is the U.S. is as guilty as Mexico of subsidizing sugar growers. Our sugar policy is designed to artificially lower the supply getting to market via a complex mix of domestic marketing controls and import quotas. Domestic growers sell their sugar at prices that are anywhere from 50% to 100% higher than the price of sugar on the world market.”

Read the full op-ed here.

Why Those Halloween Candy Treats Are So Expensive

The Daily Signal
Commentary By: Preston Turner, The Heritage Foundation

Excerpt: “Your Halloween candy is costing you more than it should—because of a government program.

“For decades, the federal sugar program has artificially kept the price of sugar excessively high. According to the most recent data from the U.S. Department of Agriculture, it cost 37.5 cents to buy a pound of wholesale refined beet sugar in the United States, yet it only cost 19.2 cents for a pound of refined sugar on the world market.

“Yearly fiscal data tell a similar story. From 2000 to 2014, the average price for a pound of wholesale refined beet sugar in the U.S. was 32.5 cents. The average price for a pound of refined sugar on the world market was just 17.5 cents.”

The full piece can be found here.

Why the Sugar Program Should Be Eliminated

The Daily Signal
Commentary By: Daren Bakst and Bryan Riley, The Heritage Foundation

Excerpt: “Rep. Ted Yoho, R-Fla., has introduced a resolution that allegedly would eliminate domestic sugar subsidies after numerous other countries got rid of their subsidies.

“This ‘zero-for-zero’ plan, which has been pushed by U.S. sugar growers, is based on a seriously flawed premise: that the United States shouldn’t eliminate damaging economic policies if other countries have similarly self-destructive policies.

“Subsidies are bad policy regardless of what other countries do. They can distort markets, increase costs to consumers and taxpayers, reduce competition and discourage innovation, among other things.

“The U.S. sugar program is no exception. Under this program, the federal government tries to control how much sugar can be sold in the country through price guarantees, marketing allotments that limit how much sugar processors can sell each year and import restrictions that reduce the amount of imports.”

Read the full piece here.

U.S. Can’t Get Enough Sugar For Dum Dums With Import Curb

By: Luzi Ann Javier and Marvin G. Perez

Spangler Candy Co. saw last month just how tight and costly U.S. sugar supplies are. For the first time in at least 38 years, the company couldn’t get the sweetener it needed to make Dum Dum Pops and candy canes.

When a power failure halted shipments from Spangler’s main supplier, Chief Executive Officer Kirk Vashaw scrambled to find alternatives. He came up 25 percent short, forcing a cut in candy output at the Bryan, Ohio-based company his family has run for four generations. Sugar is 70 percent of his ingredient costs. While the disruption lasted a day, Vashaw says inventory is getting tighter than when prices surged to a record in 2010.

U.S. food companies can’t get enough sugar even as the world heads for a fifth straight year of surpluses. Imports are restricted by tariffs first imposed two centuries ago to protect cane farmers, and a trade dispute is slowing deliveries from Mexico, the top foreign supplier. The gap between U.S. and world prices reached the widest in two years, adding to costs for buyers including Hershey (HSY) Co. that already are charging more for candy to cover increases in cocoa and dairy products.

“There’s not a lot of sugar to sell right now,” said Frank Jenkins, the president of South Norwalk, Connecticut-based JSG Commodities, the largest U.S. sugar broker. “We’re going to need to increase imports, otherwise we’re going to run out of sugar or prices will continue to rise.”

Read the full article here.