Big sugar and the USDA

American Sugar producers have the federal government in their pockets. Not only is there a huge tariff on imported sugar, but now the Department of Agriculture is proposing to purchase 400,000 tons (with a “t”) of sugar from domestic producers so that those producers who borrowed money from the USDA are not at risk of default. In the Wall Street Journal I read:

NEW YORK—The U.S. Department of Agriculture is likely to buy sugar in the domestic market this year in order to drive prices up and prevent defaults on loans made to sugar processors, according to a USDA economist.

The USDA estimates it would need to buy 400,000 tons of sugar to boost prices to an “acceptable level,” said Barbara Fecso, an economist at the department. A purchase of 400,000 tons would amount to about 4.4% of projected U.S. sugar production in the marketing year that ends Sept. 30.

Domestic sugar prices have been trading at about 20 cents a pound, their lowest level in nearly four years, putting companies that make sugar from cane or beets at risk of defaulting on loans they received from the USDA when prices were higher.

This argument is so wrong, I can’t begin to believe that an actual economist, one Barbara Fecso, made it. First, it’s wrong to increase the cost of sugar domestically by imposing a tariff on American consumers that cost purchasers in the U.S. reportedly $3.86 billion per year (with a “b”) according to the real economist Mark J. Perry at the Carpe Diem blog. We pay on average 56 cents a pound for sugar in the U.S., while the international market is closer to 31 cents. Then, it’s wrong to subsidize producers by boosting the price of sugar through this crazy new program from the USDA. Finally, it’s wrong to have taxpayers foot the bill for these excessive purchases of sugar on the open market. It’s the people’s money, not the bureaucrats.

If that doesn’t get your blood boiling, look at this blog post from Arnold Kling, who read an advertisement in the Washington Post paid for by sugar producers advocating higher prices, and decrying “big candy”.

Big Candy’s Greed
[picture of a suit pocket stuffed with cash next to a picture of a farm with a foreclosure sign]
Jeopardizing 142,000 U.S. jobs and America’s food security isn’t a game. It’s a travesty.
So why are Big Candy executives lobbying Congress to outsource America’s sugar production?
To boost their already bloated profit margins at the expense of American farmers, workers and consumers.
Winners: A few corporate executives.
Losers: America
Support Current Sugar Policy–It Works for America
American Sugar Alliance
Backing America’s Beet and Cane Farmers

The worst aspect of this is that it is the Republican party members like Florida Congressman Tom Rooney (R-sugar) who are supporting these greedy sugar producers, at the expense of consumers. I thought the Republicans were the party of free markets. Not so much if it’s their contributors in the sugar lobby who are at risk of all that pesky consumer free choice. Throw them all out!

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