Bipartisan Congressional Group Stands up for U.S. Consumers Over Special Interest Sugar Farmers

The chart above shows how government policies have artificially inflated the U.S. price of sugar to more than double the world price going back to the early 1980s.  World prices have averaged about 14 cents per pound (wholesale) since 1982, less than half of the U.S. average over that time period of almost 29 cents per pound.  Import quota restrictions that strictly limit the amount of imported sugar coming into the U.S. at the world price protect the domestic producers from more efficient foreign sugar growers who can produce cane sugar in Central America, Africa and the Caribbean at half the cost of beet sugar in Minnesota and Michigan. By preventing American households and sugar-using companies from buying imported sugar at the world price, America's trade policies imposed an unnecessary $4 billion burden on the American consumer according to my January study.

Not that it will necessarily result in any significant changes to the status quo, but it's still hopeful that a bipartisan coalition of 22 members of Congress have signed a letter highlighting the need to reform federal sugar policy, and they are urging the House leaders to have a robust debate on the U.S. sugar program during consideration of the 2012 Farm Bill. Here are some excerpts from the letter:

“Current U.S. sugar policy harms consumers, small businesses and workers. A recent study by Iowa State University researchers pegs the cost of the sugar program at about $3.5 billion in added consumer spending, and 20,000 foregone jobs, every year.

No other farm program is deliberately designed to transfer income from American consumers and workers to a small, but "special" interest of sugar processors and growers. 

The sugar program is the last of the command-and-control programs that has yet to be reformed by Congress, and in fact, U.S. sugar policy grows worse with every passing farm bill.  We urge you to ensure that Congress uses the Farm Bill as an opportunity to protect consumers and create jobs — something our current law prevents.”

 MP: Like all trade protection, U.S. sugar policy exists to protect an inefficient domestic industry (sugar beet farmers) from more efficient foreign producers (cane sugar farmers), and comes at the expense of the U.S. consumers and the American companies using sugar as an input, and makes our country worse off, on net.

 This case is a perfect occasion to invoke this quote from French economist Frederic Bastiat: "Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race." 

U.S. sugar policy has a long history, going back to 1789 when the First Congress of the United States imposed tariffs on foreign sugar, and is a perfect illustration of trade policy that ignores the viewpoint of disorganized, dispersed consumers in favor of the concentrated, well-organized interests of producers. Kudos to the 22 members of Congress who have recognized the harm U.S. sugar policy inflicts on the American economy (raising prices, destroying jobs), and are taking steps to implement changes to protect American consumers over a well-organized, anti-consumer, special interest group of U.S. sugar growers.