With the House and Senate Agriculture Committees set to mark-up a new farm bill this week, The Heritage Foundation’s Daren Bakst pulled together a few things for Congress to keep in mind in a recent blog post.

1) Central planning is just as bad with agriculture as it is with any other industry. Some in Washington may think, for example, that they can take on the impossible tasks of determining the perfect price for soybeans or the proper supply of sugar. Only the free market, and not centrally planned economic systems, can allocate resources in the most productive manner. Agriculture is an extremely complicated sector, and those who advocate for limited government and free-market principles in all other aspects of the economy shouldn’t create a special exception for agriculture. …

6) Subsidies hurt consumers. The cost of subsidies is not just limited to the burden on taxpayers. Consumers are also harmed because of higher prices that result from artificial attempts to drive up prices, such as through quotas and tariffs. The sugar program, for example, which is essentially one big anti-consumer market distortion, has led to American sugar prices being two to four times greater than world sugar prices.

Read the full blog post here.

In a Valentine’s Day-themed blog post today, The Heritage Foundation’s Ashlee Smith succinctly points out exactly why Congress should reform sugar program as soon as possible this year, writing:

“Valentine’s Day is synonymous with roses, chocolate, and those wonderfully sweet heart-shaped sugar candies. What isn’t so sweet about the holiday of love is the ‘love’ that the U.S. sugar program sends to consumers in the form of higher prices and fewer jobs.

“The federal government has been propping up the sugar industry since World War I and sugar farmers are doing everything they can to ensure subsidies and protection policies remain intact.

“The U.S sugar program, included in the farm bill, is a government program creating price supports for American sugar growers. The program places limitations on the amount of sugar that can be imported. Once this limit is exceeded imported sugar faces exorbitant tariffs. Federal limitations on sugar imports force U.S. consumers to pay more per pound than the world sugar price.

“It’s not only sugar prices that are affected. The sugar program leads to higher prices for many products that include sugar like cereal, soda, ketchup, fruit juice, and bread. One study conducted found that the unseen food taxes equate to $3.5 billion in added cost for consumers per year.

“The sugar program isn’t doing a good job of protecting anyone or anything except special-interest groups and inflated prices.”

Read the full blog post here.

In a letter sent yesterday to new Members of Congress, 22 major business, consumer and environmental organizations called for reform of the current U.S. sugar program this year.

Noting the estimated $3.5 billion annual cost to consumers, the members of the Coalition for Sugar Reform wrote:

“The federal government has no business imposing such extraordinary costs on everyone except the sugar growers and processors. The sugar industry is able to reap record profits when domestic sugar supplies are tight because of government restrictions, and yet pass on the cost of the sugar program to taxpayers when surplus sugar burdens the market. …

“In fact, the sugar reform that is likely to be considered by Congress this year will merely restore sugar policies that growers supported and that were contained in the 2002 farm bill.”

Read the full letter here.

Happy Halloween! In a blog posted today, one of the nation’s leading consumer advocacy organizations, the National Consumers League (NCL) urged Congress to reform costly, “spooky,” sugar subsidies in the farm bill. Teresa Green, NCL Linda Golodner Food Safety & Nutrition Fellow, wrote:

“Halloween and all of the sweet treats American families buy at this time of year are a reminder of one of many critical issues Congress must address: U.S. sugar program reform. Costing American consumers an extra $3.5 billion a year in higher grocery bills, the sugar program, which began during the Great Depression, is in dire need of reform….

“The U.S. sugar program costs the average family of four $40 per year. This may seem like an insignificant amount, but when multiplied by 300 million Americans, the total cost to U.S. consumers is $3.5 billion every year.

“By artificially raising the U.S. price of sugar, the program acts as a hidden tax on consumers, impacting all products that use sugar. These items include the obvious things like candy, cookies and other treats, but also less obvious products such as bread, tomato sauce, peanut butter and frozen veggies. Furthermore, this ‘hidden tax’ is also regressive, because low-income consumers spend a higher percentage of their income on food.”

To read the full blog post, click here.

As a recent piece by Florida columnist Eve Samples asserts, the costs of the U.S. sugar program are not just economic, they’re environmental. Samples wrote:

“Call it a subsidy or call it a price support. Ultimately, the effect on everyday people is the same: We pay more.

“… Take it from the Coalition for Sugar Reform, a group that includes the U.S. Chamber of Commerce, the libertarian-leaning Club for Growth and
beverage and candy-makers.

“Put in place to support American sugar farmers by keeping their prices artificially high, the U.S. sugar program has proven counterproductive in today’s global economy,” the Coalition for Sugar reform stated in a news release in August.

“The coalition estimates sugar price supports and production quotas cost consumers $3.5 billion a year.

“Why does sugar policy matter for the St. Lucie River?

“Inflated sugar prices prop up the value of land south of Lake Okeechobee — land essential to restoring the southward flow of water to the Everglades.

“… [A]lmost 600 million gallons of water per day were pouring out of the St. Lucie Lock & Dam — much of it from Lake Okeechobee, and some of it from local rain runoff. The freshwater deluge has offset the balance of saltwater in the St. Lucie River estuary, and the fertilizer runoff it carries is suffocating to river life.”

To read the full column, click here.

In a recent blog post published on the Americans for Tax Reform website, the group details the costs of U.S. sugar program on American consumers, writing:

“Sugar prices in the United States are kept artificially high through a 3-part system of economic controls.  First, the government imposes a rigid quota system on sugar production. … This cartel structure makes it illegal for producers to sell sugar that exceeds their given quota. The government further controls the sugar market through a two-tiered tariff system that allows U.S. growers to provide about 85% of the market and keeps prices artificially high. Finally, the federal government operates a complicated loan system to ensure sugar prices do not fall below a government-mandated price floor. …

“These market control methods work out very well for the approximately 4,700 United States sugar growers who benefit from them. For millions of US consumers, taxpayers, and workers however, the costs of these policies far outweigh any benefit.

“Analysts estimate that US consumers and businesses pay anywhere from $3.5 to $4.5 billion in higher costs due to the government’s inflation of sugar prices. Taxpayers too, shoulder the burden of the government’s intrusion in the sugar market. The Congressional Budget Office estimates that the surplus sugar the government buys and sells, at a loss, to ethanol producers, will cost taxpayers $374 million over the next decade.”

To read the full blog post, click here.

In an op-ed published today in The Hill, Sens. Jeanne Shaheen (D-NH), Richard Lugar (R-IN) and Pat Toomey (R-PA), highlighted growing bipartisan support for reforming the outdated U.S. sugar program and urged their congressional colleagues to build on that momentum.  They wrote in part:

“Congress talks a lot about saving people money — and now we have a chance to put our money where our mouth is.  That’s why we are pushing for bipartisan, commonsense reform to an extravagant sugar price-support program that costs consumers and businesses an estimated $3.5 billion and 20,000 jobs each year.

“Our efforts to reform the sugar program in the Senate garnered record-breaking support and came close to succeeding this summer.  Now Congress needs to continue to build on that momentum.  In doing so, we would protect consumers, help American companies compete and save taxpayers $72 million over 10 years.

“… The momentum for change is clear. … During Senate debate on the farm bill, we saw strong support for our amendments to reform the sugar program, significantly more than the last time similar legislation was introduced in 2001.  We were encouraged by this growing bipartisan support.

“… As we look at ways to help American families and small businesses prosper, no group or program should be immune to change.  Even programs with the best intentions can outlive their usefulness. The sugar program certainly has.”

To read the full text of the op-ed, click here.

Clearly, the sugar lobby is desperate to protect the sacred cow sugar program, as is evidenced by a new series of misleading advertisements.  In one, they claim that the U.S. candy industry “boasts bigger profit margins than big oil,” with profits of 35% compared to the oil industry’s 6.7%.  This is not only false, but the comparison is absurd.

In a “Fact Check” email sent yesterday to Congressional offices, among others, the Coalition for Sugar Reform set the record straight.  The email reads in part:

• First, though the sugar lobby claims the 35% figure reflects candy companies’ profits, that is not true.  The number refers to retailers’ markup on candy – an amount determined by the stores that sell candy, not the companies that manufacture it.  According to Value Line, food retailers’ net profit margins are less than 2%.  

• Second, food manufacturers’ and candy makers’ net profit margins are on average less than 10% – not remotely close to 35% nor high compared to all industries.

• Third, this is a misleading apples and oranges comparison.  Comparing retailer markups and net profit margins of oil companies is simply absurd.  

To read the full text “Fact Check,” click here.

The sugar lobby falsely claims that the U.S. sugar program helps sustain 142,000 American jobs and any efforts to reform the program – even the most modest – threaten those jobs.  A recently published Agralytica white paper debunks the 142,000 jobs myth.  The paper reports:

“In farm bill lobbying efforts, sugar producers have said that their industry’s impact on employment is equivalent to 142,000 jobs. They get to that number by starting with an inflated estimate of about 40,000 directly employed in the industry and then using Commerce Department multipliers from an input-output model to calculate indirect employment effects in other sectors. That increases the number by more than 250% to their 142,000. Sugar users could also play that game, increasing the 592,000 directly employed in sugar-using industries with multipliers and saying that 2.1 million jobs are adversely affected by the sugar program.

“It is reasonable to use Commerce Department multipliers in connection with changes at the margin, but not in telling fairy tales about eliminating an industry. And let’s be accurate about the basic facts. Actual employment in the sugar industry is periodically published by the U.S. International Trade Commission (USITC), and is about 18,000, not 40,000 or 142,000.”

To read the full text of the paper, click here.

Today, 10 Members of the House Agriculture Committee stood up to support American consumers and job creation by voting in favor of an amendment offered by Rep. Bob Goodlatte (R-VA) to make modest reforms to the U.S. sugar program.  Though the amendment failed and the Coalition for Sugar Reform expressed deep disappointment, we commend the 10 Members for their leadership on sugar reform.  They include:

1. Rep. Scott DesJarlais (R-TN)
2. Rep. Marcia Fudge (D-OH)
3. Rep. Bob Goodlatte (R-VA)
4. Rep. Tim Huelskamp (R-KS)
5. Rep. Tim Johnson (R-IL)
6. Rep. Randy Neuegebauer (R-TX)
7. Rep. Reid Ribble (R-WI)
8. Rep. David Scott (D-GA)
9. Rep. Marlin Stutzman (R-IN)
10. Rep. Glenn Thompson (R-PA)