There’s a great op-ed by Senator Richard Lugar (R-Ind.) in The Washington Times today telling how Big Sugar’s sweet deal harms consumers, leads to job losses, while benefitting a small group of sugar cane and sugar beet producers. To address the egregious sugar program, Sen. Lugar is introducing a bill today — the Free Sugar Act of 2011 — that would repeal the Depression-era central planning system of allocating domestic supply, guaranteeing a minimum price for sugar, and restricting the import of less expensive sugar. Sen. Lugar notes in his op-ed the command-and-control approach of the sugar program:
In sugar land, as in communist countries, prices are set by the government, not the market. Agriculture Department central planners determine “marketing allotments” to assure domestic producers at least 85 percent of the market. They limit imports to keep prices inflated far above world levels. The planners set the split between cane and beet sugar and mandate a sales limit for each processor and mill.
If prices fall below the official level, a price-support system of “loans” to processors ensures that Big Sugar gets its federal share. The recipients get their loans in taxpayer dollars, but can repay them in (what else?) sugar.
The U.S. historically is not self-sufficient in sugar and there’s usually plenty available on world markets. But American buyers can’t take advantage of lower-priced sugar thanks to strict import quotas, set individually for 40 different countries.
CEI supports that bill and points out in a press release to be sent out today that the U.S. sugar program’s central planning system raises costs to consumers, estimated at about $2 billion per year, and leads to significant job losses in sugar-using firms that are forced to pay double the world price for sugar. Here’s what CEI says:
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. . . . The sugar program is now over 75 years old. Reform is long overdue.