Sugar in the U.S. costs nearly twice as much as elsewhere in the world, raising prices for candy, baked goods, ice cream and more. The reason is no mystery. A government farm-subsidy program in effect since the 1930s blocks cheaper imports and controls the price and quantity of sugar in our marketplace. As in the days of Soviet central planning, the program benefits a few at the expense of the many.
The main culprits? A small group of domestic sugar processors, sugar cane growers in Florida, Louisiana and Texas, and sugar beet producers in a handful of mostly northern states. Lining the pockets of this wealthy, politically connected pressure group costs U.S. consumers at least $2.4 billion at the grocery store each year.
Is Minnesota really one of the nation's top sugar producers?
Someday, the price-gouging must stop, and reformers have high hopes for the 2023 farm bill — the federal farm and food policy legislation that comes up for renewal every five years. Voters are justifiably angry about the high cost of food, and no doubt would support eliminating a hidden tax that assaults bedrock principles of capitalism and fair trade.
But change will only happen over the objections of politicians (like Florida's GOP Sen. Marco Rubio) who've taken six-figure campaign contributions from Big Sugar. So have many other politicians on both sides of the aisle.
The current version of the U.S. sugar program, established in 1981, directs the Agriculture Department to guarantee higher prices for farmers by limiting supplies through production quotas, while restricting and taxing imports. A "loan" program funnels payments to domestic processors, who can pay back the funds in sugar. The government also buys any "surplus" that might weigh on prices and directs it to another politically favored group: companies that turn sugar into ethanol fuel.
This system is a tour de force of anticompetitive corporate welfare and the fact that it's still being used to stiff consumers shows the power of single-minded lobbying.
The 2008 and 2018 farm bills arguably made the program even worse for shoppers and food manufacturers. Some companies, including Coca-Cola and Pepsi, long ago reformulated many of their U.S. products with corn syrup to sidestep the sugar gouging. That's why many consumers prefer Mexican Coke.
Any effort to change the program is likely to meet with phony objections, as when a modest reform effort five years ago was branded a "sugar farmer bankruptcy bill." The reality is that allowing imports would result in a 10%-12% cut in domestic cane sugar employment while beet sugar employment would likely increase along with exports, according to a study by the U.S. International Trade Commission.
Consumers would benefit from letting a freer market prevail, and the industry would get more competitive, as it did in Australia, which ended sugar subsidies years ago and still produces huge quantities at world-market prices.
Given that consuming sugar is unhealthy, you might think that keeping the price artificially high has advantages. Alas, high prices have prevailed for decades and Americans still consume too much, including in products like yogurt and granola bars thought to be, and often marketed as, "good-for-you."
European regulators limit the amount of sugar that can be added to processed foods, and in some cases ban products deemed unhealthy. That nanny-state approach hasn't worked in the past and we doubt that similar restrictions would make a positive difference today.
We favor clear, easy-to-read disclosures so people can decide for themselves what to consume. More people need to recognize just how much sugar is added to their food, just as more need to know how Big Sugar siphons money from their wallets.
The leaders of the House and Senate Agriculture committees overseeing the 2023 farm bill are thought to be less beholden to the sugar cartel than some of their predecessors, and less caught up in distracting disputes over immigration policy. Food manufacturers make up a strong constituency, operating in every state, and they're expected to seek changes to the program that would allow more imports and bring prices down.
They might not care, however, if Congress finds new ways to pay off its sugar daddies, at taxpayer expense. We urge the political forces gathering for the farm bill to make 2023 the year that Big Sugar finally gets told "No!" Just as sweetly as possible.
The best sugar program for the U.S. would be no sugar program at all.