More Sugar Lobbying; Will It Ever End?

Lynne Kiesling

Today’s New York Times has an editorial on the sugar lobby, and the apparent unwillingness of the members of Congress to do anything constructive to constrain their special interest self-aggrandizement.

A couple of weeks ago the Times ran a story on the sugar industry’s attempts to construct a political hedge for their profits by pushing Congress to implement policies subsidizing the use of sugar in ethanol production. As this editorial notes, NAFTA’s long-suffering provision allowing for increased imports of sugar from Mexico will finally go into effect soon, and the domestic sugar industry is looking for ways to offset what they see as the loss of a market that belongs to them. How will that happen? By the federal government buying domestic sugar at an artificially high price, and then reselling it (probably at a large loss) to ethanol producers:

Under the current system, the government guarantees a price floor for sugar and limits the sugar supply — placing quotas on domestic production and quotas and tariffs to limit imports. According to the Organization for Economic Cooperation and Development, sugar supports cost American consumers — who pay double the average world price — more than $1.5 billion a year. The system also bars farmers in some of the poorest countries of the world from selling their sugar here.

The North American Free Trade Agreement is about to topple this cozy arrangement. Next year, Mexican sugar will be allowed to enter the United States free of any quotas or duties, threatening a flood of imports. Rather than taking the opportunity to untangle the sugar program in this year’s farm bill, Congress has decided to bolster the old system.

Both the House bill, which was passed in July, and the Senate version, which could be voted on as early as this week, guarantee that the government will buy from American farmers an amount of sugar equivalent to 85 percent of domestic consumption — regardless of how much comes in from abroad. To add insult to injury, both also increase the longstanding price guarantee for sugar.

The bills encourage the government to operate the program at no cost to the budget, by selling the surplus sugar to the ethanol industry. That’s not likely. Ethanol makers will never accept paying anywhere near sugar’s guaranteed price. According to rough estimates from the Congressional Budget Office, supports for sugar in the House bill could cost taxpayers from $750 million to $850 million over the next five years.

In addition to finding this proposal inefficient, wasteful, and a pathetic way to spend our tax dollars, I find this legislation, and the process that has produced it, completely and utterly obscene.