Opinion: The U.S. spends $4 billion a year subsidizing ‘Stalinist-style’ domestic sugar production, by Vincent H. Smith

A few sugar growers get rich by getting the government to force us to pay them subsidies. From Vincent H. Smith at marketwatch.com:

On average, U.S. sugar prices are about twice as high as world prices

Joe Raedle/Getty Image
Harvesting sugar cane in Florida. A sugar refining facility is in the background.

In the United States, fewer than 4,500 farm businesses produce sugar. Yet they cost taxpayers up to $4 billion a year in subsidies.

The U.S. 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 U.S. prices — on average U.S. sugar prices are about twice as high as world prices SBV8, +0.57%   — ensuring domestic sugar production is artificially higher, crowding out other productive uses of irrigable farmland.

Only the shrinking group of those raising sugar beets and sugar cane benefit from this program, receiving an average of over $700,000 per grower each year, according to an analysis by the American Enterprise Institute.

The program, which dates back to the 1981 farm bill, generates over $1 billion a year in profits for growers, or an average of more than $200,000 per grower, according to the AEI report. 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 U.S. Sugar Alliance, the major lobbying arm for U.S. sugar growers, is extremely well funded and uses its resources to maintain a highly protectionist, trade-distorting program that costs a family of four between about $44 and nearly $50 a year in subsidies.

The program is also a job killer. On a net basis, employment losses in the U.S. food-processing sector more than offset any positive employment impacts in the U.S. sugar-processing sector. The net result is reductions in U.S. manufacturing employment opportunities in the order of 10,000 to 20,000 jobs every year, according to the AEI report.

To continue reading: Opinion: The U.S. spends $4 billion a year subsidizing ‘Stalinist-style’ domestic sugar production

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