It’s not a sexy issue. Indeed, with last week’s passage of the farm bill, little can be done about it now, but the inequity, audacity and hypocrisy associated with the politics of sugar cry out for comment.
The U.S. sugar program is a collection of import restrictions, price floors and taxpayer-backed loans designed to prop up some 4,500 domestic sugar growers while costing everyone else billions in higher prices, lost jobs and preposterous bailouts.
“It’s the most constrained and lucrative subsidy in the entire farm bill,” Rep. Jackie Speier, D-Hillsborough, told me.
The Bay Area Democrat was one of 20 in California’s congressional delegation favoring a House amendment to overhaul the sugar subsidy. Among Sacramento-area members, only Democrat John Garamendi and Republican Tom McClintock supported the amendment. Minority Leader Nancy Pelosi and Republican Minority Whip Kevin McCarthy opposed it.
Countless food products use sugar. Eighty-five percent of the sugar that food manufacturers use for their products is grown here even though, from 2000 to 2012, the average price of domestic sugar was more than double the worldwide average.
Couldn’t you use more foreign sugar and cut production costs? Nope. Federal rules have restricted sugar imports to 15 percent since 1981. Before that, sugar imports accounted for half the U.S. market.
That import “absolutely guarantees that all consumers and businesses using sugar will pay more money,” Speier said. “Almost $3.5 billion annually.”
Who controls this price-control contrivance? Big Sugar.
Although sugar products comprise only 1 percent of total domestic crop production, the sugar industry accounts for 35 percent of all lobbying expenditures by crop producers, according to the Center for Responsive Politics: $8 million in 2012 and nearly $42 million since 1990, including more than $16 million by the industry’s most powerful producer, the Fanjul family, which controls 40 percent of Florida’s sugar crop. The Fanjuls own Domino and C&H Sugar and operate refineries in multiple states, including California.
Gee, if only those food stamp “takers” could afford such an “investment.”
For decades, the Fanjuls, along with sugar cane and sugar beet producers in a dozen-plus states, have cultivated quite the caucus to protect their profits: lawmakers in both sugar and non-sugar states cooed by campaign contributions, corn farmers profiting from expensive sugar by selling cheaper high-fructose syrup to food producers trying to cut costs, and labor unions fearful of sugar jobs going overseas.
“If you asked your congressman how much the sugar subsidy costs his constituents, he wouldn’t have a clue,” UC Davis agricultural economist Daniel Sumner told me.
Do constituents know? Most “wouldn’t know we had a sugar program,” Sumner said.
The sugar industry claims its subsidy is “cost-free.” Various federal studies show otherwise:
• For each sugar-growing job saved through higher U.S. sugar prices, nearly three confectionery manufacturing jobs are lost.
• Higher domestic sugar costs are forcing American companies to relocate their factories abroad. Between 1998 and 2011, the United States saw a 22 percent drop in confectionery-manufacturing employment, and a nearly 8 percent drop in food-manufacturing employment. For perspective: Total number of Americans employed in the sugar industry: 61,000. In industries using that sugar: 988,000.
• 42 percent of all sugar subsidies go to just 1 percent of sugar growers.
Bob Simpson, COO of Jelly Belly in Fairfield, where sugar is half the production cost, told me: “There are 92,000 sugar use-related jobs in California. There are less than 2,000 jobs in California related to sugar production. It’s crazy that they can leverage what little they have in people who make sugar compared to people who buy sugar.”
There’s more. NAFTA allows for Mexico to sell its sugar here. A 2013 bumper crop forced U.S. sugar prices to drop 18 percent. “Good!” you say. Except Washington spent more than $300 million in tax dollars to buy back 300,000 tons of sugar from domestic producers and take it off the market.
Why the bailout? Prices fell to where sugar producers couldn’t pay back federal loans they received in 2012. (Washington makes loans to sugar processors annually as part of a program dating back to the 1934 Sugar Act.)
So even with limited international competition, Big Sugar still wins; we lose. Government buys back sugar at a loss, hoping to raise sugar prices for citizens. Politicized capitalism at its finest.
I wonder if all those congressional ballyhooers of free-market capitalism know that the Fanjuls want to expand in Europe. Europe’s trade barriers prevent this, but the Fanjuls are asking the European Union to lower those barriers. I see. They don’t want foreign competition here but they want Europe to allow foreign competition there. Not exactly a two-way street, is it? Neither is the sugar program, but with passage of the farm bill, we’re stuck with it for at least another five years.
Bet I know what the sugar cartel is saying about us: “Let them eat cake.”
Bruce Maiman is a former radio host who lives in Rocklin. Reach him at email@example.com.