Time for Sugar to Get with the Times
Jun 07, 2012
Both the House and Senate seem to be moving forward, for now, with reauthorization of the Farm Bill. Senator Stabenow has passed a package out of the Senate Agriculture Committee. The House has hung back a little; waiting on the Senate.
While it is expected that the two packages will be significantly different, one thing that is expected in both bills is major "reform" of farm programs. The Senate bill saves over $23 billion, and the cuts come from many different programs, from direct payments to SNAP (Food Stamps). However, one program that seems to have escaped reform so far is the sugar program.
We have had farm programs for as long as we have had a Farm Bill, and the programs have all been moving towards a more market-based approach. In addition, given the current fiscal state our country is in, government spending and programs must be reduced, and the pain should be spread around all sectors and programs.
For some reason, the sugar program has proved to be a unique case, somehow immune to the market-based movement. The sugar program began as a depression-era program, along with other commodity programs.
Go back to the 1940s, 50s, and 60s. For decades, the federal government was busy centralizing production with land set-asides and cropping restrictions to short the market and increase the price of commodities. Almost all of those control programs are gone today. Gone – for corn, soybeans, wheat, cotton, even tobacco and peanuts. But not sugar.
The government controls how much sugar can be produced in the U.S., and also controls how much can be imported. This drives up the price of sugar in the U.S. to sometimes double what everyone else in the world pays. This artificially increased price has impacted all the food manufacturers that use sugar, encouraging some companies to move to Canada and Mexico where sugar costs are so much lower.
There is no good reason that the sugar program should not become more market-based. Sugar plantation owners will tell you that their program is "no-cost," when actually the cost to consumers is approximately $4 billion a year. That cost comes directly to you when you go to the grocery store and buy bread, juice, or your 5 pound bag of sugar to make cookies. Part of the sugar program leaves taxpayers on the hook if sugar plantations produce too much sugar, forcing the government to buy the surplus at a loss.
It is time for sugar to get with the times, and for Congress to take action to make the sugar program more market-based.
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com
Until next week, I am John Block in Washington.