Government Subsidies to Sugar Industry Add More Than $2 Billion a Year to Food Prices

Wednesday, September 19, 2012

In Washington, Big Sugar is not an affectionate nickname, but rather a powerful lobby that garners generous subsidies which wind up costing consumers billions of dollars annually.

 

As a result of import tariffs and agricultural loans authorized by Congress, inflated sugar prices have forced Americans to spend $2.4 billion more each year on food containing the sweet ingredient, with sugar producers gaining $1.4 billion in benefits.

 

The sugar industry gets its way through substantial donations to lawmakers. This election cycle alone, sugar farmers have contributed $3.6 million to campaigns, which is more than what Big Tobacco has donated ($2.8 million).

 

Big Sugar has been especially nice to Congress this year because the subsidies (part of the Agriculture Reform, Food and Jobs Act) must be renewed this month before they expire.

 

Some politicians, including Mitt Romney, want to end price supports and let the market determine the cost of sugar. Others have tried to reform the subsidy program, only to watch their plans die in Congress. There is precedent for what Romney proposes. The program was ended temporarily in 1974 thanks to booming commodity prices, but payment to sugar producers and import quotas were soon reintroduced.

 

Michael Wohlgenant, a North Carolina State University agricultural economics professor specializing in the sugar industry, told the Florida Center for Investigative Reporting that “if U.S. sugar were to compete on the global market without government supports, the world price of sugar would rise 8.5 percent, but the U.S. price would tumble 41.5 percent—a boon for food consumers but a bust for farmers.”

-Noel Brinkerhoff, David Wallechinsky

 

To Learn More:

In Sugar Price Supports, Sour Tastes for Consumers (by Amy Green, Florida Center for Investigative Reporting)

Why are Americans Growing Obese? Blame Richard Nixon and Earl Butz (by Matt Bewig, AllGov)

Speculators Drive Sugar Prices to 30-Year High (by Noel Brinkerhoff, AllGov)

History of the Sugar Program: America & Sugar: A Salty Tale (Coalition for Sugar Reform)

Comments

Attila 5 years ago
No sweetheart deal here; it is the type of corruption the founders had in mind when they restricted the federal government's authority to defense and foreign relations. No subsidy is legal.

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