Sen. Lugar’s Bill to Repeal U.S. Sugar Program to Benefit Consumers, Economy, Developing Countries

Contact:

Christine Hall, 202.331.2258

March 30, 2011, Washington, D.C. – Legislation introduced today by Sen. Richard Lugar (R-IN) marks a bold step towards repealing the U.S. sugar program – a program that relies on price supports, restrictions on domestic supply, and import quotas to raise sugar prices about twice those on the world market.

The sugar program is a central planning system that makes consumers pay more for many foods and beverages, means real jobs loss in sugar-using companies, and shuts developing countries out of important markets.

While the arguments for reforming the US sugar program are compelling, big sugar producers have so far been able to fend off all reforms. Government continues to prop up sugar prices, to limit sugar imports, and to provide the industry with special loans on special terms. Senator Lugar’s bill addresses all of these excesses of a bloated program, which benefits a few at the expense of the many. Effective 2012, his bill would prohibit the price support program, eliminate domestic marketing allotments, abolish sugar tariffs and allow free trade in sugar.

• Government agencies like the Government Accountability Office (GAO) have estimated that the sugar program costs U.S. consumers almost $2 billion per year. The poor are hit hardest because they pay a much higher share of their incomes on food.
• The U.S. sugar program also affects jobs. Some sugar-using firms – faced with steep domestic costs and supply restrictions on sugar – have gone out of business or relocated their companies where sugar supplies are available at world market prices. In fact, the GAO found that for each sugar-growing and harvesting job saved through high U.S. sugar prices, nearly three confectionery manufacturing jobs are lost.
• Developing countries find themselves closed out of the U.S. market. Even when their sugar production is efficient, they can’t compete in a system that depends on a selective quota system to allocate the amounts of sugar, if any, they can export to the U.S. at low or no tariffs.

The sugar program is now over 75 years old. Reform is long overdue.