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In the United States, fewer than 4,500 farm businesses produce sugar. Over half of US sugar production comes from sugar beets, which are overwhelmingly raised on highly productive irrigated land that can be used to produce many other crops. The rest consists of sugar cane produced in high rain areas like the Mississippi delta region and Florida using very substantial amounts of nitrogen and other fertilizers that, because of run off, have had severe impacts on water quality and the natural ecology of those regions.
Sugar is produced extensively in the United States for a simple reason. The US sugar program is a Stalinist-style supply control initiative that limits imports through quotas and domestic production through what are called marketing allotments. This strategy substantially increases US prices — on average US sugar prices are about twice as high as world prices — ensuring domestic sugar production is artificially higher, crowding out other productive uses of irrigable farmland. Only the 4,500 growers raising sugar beets and sugar cane benefit from this program, receiving $3 to $4 billion dollars more every year at an average of over $700,000 per grower every year. The net gain to growers has credibly been estimated at over one billion dollars a year, generating an average of more than $200,000 per grower in increased profits. Further, one Florida family that plays a dominant rule in cane production is estimated to benefit to the tune of between $150 million and $200 million a year.
No wonder the US Sugar Alliance, the major lobbying arm for US sugar growers, is extremely well funded and uses its resources to maintain a highly protectionist, trade distorting program that annually milks about $44 a year from every family of four in the US. The program is also a job killer. On a net basis, employment losses in the US food processing sector more than offset any positive employment impacts in the US sugar processing sector. The net impacts of the program are reductions in US manufacturing employment opportunities in the order of 10,000 to 20,000 jobs every year.
With the House and Senate each debating their own Farm Bills, there has never been a better moment to reform this crony capitalist program. The Senate Agriculture Committee’s farm bill, the Agriculture Improvement Act of 2018, which passed out of Committee yesterday, unfortunately leaves the bloated sugar program untouched. The House Agricultural Committee’s version of a farm bill, the Agriculture and Nutrition Act of 2018, also made no changes to the program.
However, senators will hopefully have the opportunity to incorporate commonsense reforms to the sugar program, such as the bipartisan “Sugar Policy Modernization Act” from Senators Jeanne Shaheen (D-NH) and Pat Toomey (R-PA) on the floor of the Senate in the coming weeks. A companion bill offered by Representative Virginia Fox (R-NC) also is widely supported on a bipartisan basis and deserves further consideration if and when farm bill legislation is reconsidered on the floor of the House.
If ever there was a farm program that deserved to be reformed, the US sugar program is it. It is time to stop padding the pockets of the sugar producing industry to the tune of $3 to $4 billion a year, to the detriment of US consumers, Florida property owners whose asset values have been affected by downstream pollution, and workers in the food processing sector who have lost their jobs.
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