Miami Herald
Column By: Carl Hiaasen

Cut by cut, the forced budget reductions known as the sequester are beginning to affect millions of Americans. …

Still, not everyone who depends on the federal government is suffering in these austere times.

According to the Wall Street Journal, the USDA is on the verge of purchasing 400,000 tons of sugar in a massive bailout of domestic sugar processors. The move would cost taxpayers about $80 million.

It’s the sweetest of deals for the big companies that grow cane and beets. For years the government has guaranteed an artificially high price for American sugar, undercutting foreign competitors and inflating consumer prices for everything from soft drinks to breakfast cereal.

Last year, sugar processors under the price-support program borrowed $862 million from the USDA. The loans were secured with about 2 million tons of sugar that was expected to be harvested.

And the harvest was very good. Too good, apparently. The market got flooded.

Read the full column here.

NBC
Video

Jay Leno: I saw this in the paper today, the Department of Agriculture wants to use our tax money to buy 400,000 tons of sugar to limit supply and boost prices so sugar producers can pay back government loans that they could default on. You follow me here on this? We loaned them money and now we’re giving them more money so they can pay back our loan. You still wonder why we’re 16 trillion dollars in debt? Anybody?

Watch the video here.

Sweetener Users Association

In testimony today before the U.S. International Trade Commission (USITC), Tom Earley, Vice President of Agralytica and an economist for the Sweetener Users Association (SUA), detailed how current U.S. sugar policy has destabilized the sugar market, driven up consumer and business costs and jeopardized American job creation. Earley’s testimony was delivered today during a USITC hearing on “The Economic Effects of Significant U.S. Import Restraints.”

In his remarks, Earley discussed how components of the sugar program enacted as part of the 2008 farm bill were added to already restrictive import quotas and very high tariffs on sugar outside of the quotas, resulting in both high U.S. sugar prices over the past four years and the current threat of sugar loan forfeitures.

Read the full press release here and the full testimony here.

Chicago Tribune
Editorial

Another day, another infuriating example of farm subsidies run amok: On Wednesday, The Wall Street Journal carried a story headlined, “Big Sugar Is Set For a Sweet Bailout.” When it comes to agriculture, is there any other kind of bailout?

Seems the U.S. Department of Agriculture is preparing to buy 400,000 tons of sugar — a mind-boggling amount — in order to prop up a group of commodity processors participating in a 1934-era federal price-support program.

The immediate cause of the Big Sugar Buy of 2013 is an oversupply of Midwest sugar beets and Southern sugar cane that has driven down domestic prices. America is awash in sugar. …

The USDA is leaning toward buying sugar directly. That would stick the taxpayer-backed program with an estimated $80 million loss once the government, as the law requires, sells the sugar at a discount to ethanol producers for use as motor fuel. By reducing supplies, this bailout also would raise the market price of sugar used to make sweets. Consumers, inevitably, would have to cover at least part of that additional cost in the retail prices they pay for baked goods, breakfast cereal and candy. …

Given our government’s huge budget deficits, sugar schemes leave an especially sour taste.

Read the full editorial here.

Sweetener Users Association

In response to reports that USDA may be forced to purchase 400,000 tons of sugar from domestic producers, the Sweetener Users Association (SUA) released the following statement:

“The current volatility in the U.S. sugar market and the potential for loan forfeitures is the direct result of an outdated and unbalanced U.S. sugar policy, which USDA is forced by law to administer. …

“… We urge Congress to take the opportunity to reform the U.S. sugar program this year to provide USDA with much-needed flexibility and to help ensure America’s sugar policy works for sugar users, producers and consumers.”

Read the full press release here.

Bloomberg
Editorial

Sweet reason has left U.S. agricultural policy, at least judging from the latest installment in the sugar-subsidy saga.

Because of a plunge in U.S. sugar prices amid a hefty crop of sugar beets and cane, the Agriculture Department estimates that it may have to buy 400,000 tons of sugar from processors who might default on $862 million in government loans. Sugar producers have the option of repaying the loans either with cash or with their harvests if prices fall below a certain level.

This is all part of a confection of federal price supports and subsidies for the industry. Last year, sugar processors took out loans when U.S. prices were about 25.5 cents a pound. Prices have since declined to 21 cents, just a hair above the trigger price that lets them repay with their loans with raw sugar.

The sugar, by law, would be sold to ethanol refiners, who would pay 10 cents a pound less than the government paid — an inducement needed to get the ethanol industry to use the sugar. Aside from the ridiculousness of piling one ill-advised subsidy atop another, this would produce a loss of $80 million for the U.S. Treasury. Some industry analysts estimate the government may have to buy as much as 800,000 tons of sugar to restore balance to U.S. stockpiles, potentially doubling the loss.

Read the full editorial here.

Wall Street Journal
By: Alexandra Wexler

The U.S. Department of Agriculture is considering buying 400,000 tons of sugar—enough for 142 billion Hershey’s Kisses — to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program.

The action aims to prop up tumbling U.S. sugar prices, which have fallen 18% since the USDA made the nine-month operations-financing loans beginning in October. The purchases could leave the price-support program with an $80 million loss, its biggest in 13 years, said Barbara Fecso, an economist at the USDA, in an interview.

The move would benefit companies that turn sugar beets and sugar cane into granulated sweetener, a business plied by American Crystal Sugar Co., Amalgamated Sugar Co. and U.S. Sugar Corp. The USDA wouldn’t say how many companies have received loans, or identify them. U.S. Sugar said it doesn’t have any USDA loans outstanding. American Crystal and Amalgamated didn’t respond to requests for comment.

Higher prices would hit food companies including candy giants Mars Inc., Hershey Co. and Nestlé SA,and could ultimately boost retail food prices, at a time when many consumers are financially stretched.

Read the full article here.

Wisconsin State Journal
Editorial

To see why Congress should reform federal farm policy, look no further than the program that covers sugar production.

The federal sugar program costs American consumers $2.4 billion to $3.5 billion a year and produces a net loss of 10,000 to 20,000 U.S. jobs, according to studies from North Carolina State University, Iowa State University and the U.S. Commerce Department.

It has been a factor in decisions to move manufacturing of Fannie May and Brach’s candies to Mexico and Life Savers to Canada. It even played a role in the bankruptcy of Hostess, the maker of Twinkies and cupcakes.

Grade those results against the farm policy goal of assuring adequate food supplies at affordable prices and, as a side benefit, supporting jobs. The sugar program flunks on all counts.

Read the full editorial here.

New Hampshire Union Leader
Editorial

If U.S. Sen. Jeanne Shaheen succeeds in reforming the absurd and costly U.S. sugar subsidy regime, Americans will save billions of dollars on sugar and sweetened foods and beverages. She came close two years ago, and everyone should hope her new effort succeeds.

Last Thursday, on Valentine’s Day, Shaheen introduced a new version of her bill, written with Sens. Mark Kirk, R-Il, and Pat Toomey, R-Pa., to reduce federal price supports for U.S. sugar producers. In the past, Shaheen has tried to end the price supports entirely. This bill does not go that far, unfortunately, but it probably has a better chance of passing because of that.

The federal government has developed a crazy system of regulations and subsidies that artificially inflate the price of sugar sold in the United States. In the 30 years from 1982 to 2012, the average price of sugar in the USA was more than twice the world price (29.1 cents vs. 14.4 cents per pound), University of Michigan economist Mark Perry noted in an analysis for the American Enterprise institute last week.

Last year alone, the price supports cost U.S. consumers $3 billion.

Read the full editorial here.

U.S. Chamber of Commerce’s Free Enterprise Blog
Blog Post By: Shea Bettwy

Why do food companies have to pay so much to put sugar in their products?  I thought about this yesterday when I had to empty my wallet to buy Valentine’s Day candy for my mother. I blame the U.S. federal sugar program.

The sugar program has been around since the days your great grandmother was celebrating Valentine’s Day, and it never seems to go away.  In fact, it’s been getting worse.  In 2008, Congress tacked on several new Valentine’s-Day-stifling components in the Farm Bill, including:

• Increasing loan rates that make the U.S. sugar price much higher than the world price;
• An “Overall Allotment Quantity” and tariff quotas to make sure sugar-users don’t get a grain of sugar more than they need; and
• A sugar-to-ethanol program that the Congressional Budget Office believes will cost taxpayers millions.

Sugar price supports haven’t accomplished much beyond making consumers pay $3.5 billion a year more for food, enticing food companies to leave the country, and costing too many jobs.

Read the full blog post here.