Sugar Subsidies Remain Artificially Sweet for Consumers and the Economy
Washington, DC, November 8, 2012
Just like the batches of candy at Spangler Candy Company, America’s sugar policies have been mixed, blended, and twisted for over 75 years. Originating back to 1934, the Sugar Act was created to stabilize sugar prices and protect sugar farmers during the Depression. This program, which was initially set to expire in 1940, includes outdated sugar policies that artificially inflate prices, limit domestic production, and impose strict import quotas.
Under current policy the federal government drives costs up by limiting how much sugar is permitted to be sold in the U.S. each year. Additionally, the federal government restricts the amount of sugar that can be imported annually to the U.S. from foreign producers. Due to government controls, food and beverage producers are unable to take advantage of the lower world-market prices, and should a company need to import more sugar they are faced with a high tariff. The high costs of sugar are instead passed onto businesses and consumers who buy sugar or products that contain sugar, costing an additional $3.5 billion a year.
These uncompetitive policies create domestic sugar prices that are two to three times higher than the rest of the world, hindering food and beverage production, as well as jobs. A 2006 Department of Commerce report cites that for each sugar-growing or harvesting job saved through this program there are nearly three manufacturing jobs lost.
It is estimated that the sugar-using industry generates approximately 32,200 jobs in Ohio and right here in northwest Ohio, Spangler Candy Company has over 400 local employees. Recently, I visited the candy company and spoke with Kirk Vashaw, President and CEO about the challenges the company has faced during the tough economic times. Vashaw noted that sugar makes up 70 percent of its ingredient costs and is the company’s biggest expense. He further noted that if sugar could be purchased at world-market prices, there could be an additional 200 new jobs in Ohio, and each of those jobs would create five more with their distributors.
The Free Market Sugar Act, H.R. 1385, of which I am a cosponsor, was introduced in April 2011, would repeal the sugar loan program, the marketing allotment, and the price support. The bill would also replace inflexible quota restrictions with a system that would ensure an adequate and reasonably priced sugar supply in the United States in order to keep the U.S. sugar processing industry competitive. As a cosponsor of this bipartisan bill that would fully repeal the current sugar program, I will continue to work to move this legislation forward.
With fewer than 5,000 domestic sugar producers benefiting from the current program it’s time to cut the costs of food for consumers and level the playing field. There is an opportunity for comprehensive reform of the federal sugar subsidies program through the 2012 Farm Bill. The goal is to replace the current government policy that only favors one side of the sugar industry and to put an end to artificial quotas, unnecessary government intrusion, and inflated prices. Reforming the U.S. sugar program is an essential first step to making this happen.
As the Senate and the House Agriculture Committee have debated their respective versions of the 2012 Farm Bill, a number of amendments have been offered that would significantly change current sugar policy. Although none of these amendments have been adopted, the vote records from each indicate broad bipartisan support for reforming the sugar program. I am optimistic that when the House version of the Farm Bill is brought to the House floor, we will get the opportunity to fully debate and vote on this much-needed reform.
With high unemployment and a shaky fiscal future, we cannot maintain programs that are harmful to the American economy. Instead we must advance policies that encourage American businesses to invest here, in America, while bringing consumers competitively priced high quality products. The real treat that accompanies sugar reform isn’t just lower sugar prices for consumers, but rather American jobs.