The Sugar Scandal

Wall Street Journal
Editorial

Excerpt: Americans pay nearly twice as much per pound as foreigners do for sugar, thanks to U.S. import restrictions and subsidies. We’ve tilted at this corporate welfare for decades, but new political forces are aligning to take another run.

The absurdity of the federal sugar program is legendary. Every year the government grants sugar processors nonrecourse loans linked to the amount of sugar the government says they can produce at a set price per pound: 18.75 cents for raw cane sugar and 24.09 cents for refined beet sugar. If the market price is below the loan price when it’s time to sell, the processors simply forfeit their crop to the U.S. Department of Agriculture in lieu of repaying the loan. They can still make a profit thanks to the price guaranteed by the loan.

Read the full editorial here.

Seizing The Mantle Of Leadership On Sugar Policy Reform

The Hill
Op-ed By: John Downs, Chairman, Coalition for Sugar Reform, and President, National Confectioners Association

Excerpt: Maintaining the status quo on America’s sugar policy is unsustainable and unacceptable. Congress should take any opportunity this year to reform the costly sugar subsidy program, because propping up the sugar-producing industry at the expense of taxpayers, consumers and businesses is the kind of crony capitalism the American people have grown tired of seeing — and frankly, that Washington must aggressively confront.

Because of Depression-era policies preserved by large political donations by sugar producers, the United States is home to some of the highest sugar prices of any major market in the world. Currently, prices of refined sugar in the United States are 58 percent higher than those in the European Union. There are many factors affecting domestic and global sugar prices, but one thing is for sure, if Congress continues to rubber-stamp the flawed sugar subsidy program in farm bill after farm bill, high sugar prices and taxpayer bailouts will continue to dog economic growth in the United States and threaten American jobs.

Read the full op-ed here.

Big Corn vs. Big Sugar Could Have a Sweet Outcome for Taxpayers

Washington Post
Column By: Charles Lane

Excerpt: In the never-ending fight against corporate welfare, the forces of fairness and economic rationality may have found a winning strategy: Divide and conquer.

Sometimes business lobbies leave one another’s subsidies and tax benefits alone, for fear that a general rout of all rent-seekers might ensue. This is why, for example, we have an annual “tax extenders” bill, which simultaneously renews a few dozen special breaks in the Internal Revenue Code that could never survive politically on their own.

… And now comes news of more blessed discord, this time among the agriculture lobbies. The Corn Refiners Association, headed by giant grain processors such as Cargill and Archer Daniels Midland, is taking aim at the federal sugar subsidy program — which shares both Ex-Im’s birth year, 1934, and its propensity for wasting resources and distorting markets.

Perhaps you did not know that it is unambiguously in the public interest for the United States’ sugar farmers and refiners to make a profit, even though many other countries produce this fungible, but dietarily dubious, commodity at a lower cost.

Well, Congress, well-lubricated by the sugar lobby, believes that it is, and hasn’t really revisited that conclusion for decades. And so we have country-by-country quotas on imports, buttressed by domestic price supports.

Read the full piece here.

Corn Syrup’s DC Attack on Sugar Could Hit Minnesota Beet Industry

Minneapolis Star Tribune
By Jim Spencer

Excerpt: An unexpected declaration of war by corn syrup makers against sugar refiners in the nation’s capital will likely resonate in Minnesota’s Red River Valley.

The Corn Refiners Association, a trade group made up of four giant agribusinesses including Minnetonka-based Cargill, has hired lobbyists to gut a part of the U.S. sugar program that lets sugar makers pay back government loans with sugar instead of cash. Minnesota’s nation-leading sugar beet growers consider the program’s controversial but long-standing combination of price supports, loan guarantees and import quotas crucial to their survival.

Read the full piece here.

U.S. Big Corn Goes After Old Foe, Sugar, With New Lobbying Tactic

Reuters
By: Michael Hirtzer

Excerpt: The powerful U.S. corn lobby is launching an unusual offensive against the country’s sugar sector, an old foe in the lucrative sweetener market: seeking to overturn the controversial, near-century old U.S. sugar program.

The Corn Refiners Association, which represents high-fructose corn syrup producers, has hired Washington lobbyist firm, the Alpine Group, to challenge sugar’s long-protected status, a spokesman for the organization said on Thursday.

The sugar program, which restricts imports, sets price floors and provides government-backed loans to cane and beet processors, is considered one of the most generous in the U.S. Farm Bill that passed a year ago.

“The sugar loan program is an embarrassment,” Corn Refiners chief executive officer John Bode said in a statement. Its members include Archer Daniels Midland Co and Cargill Inc.

Read the full piece here.

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

Reuters
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
Editorial

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.