Big Sugar's Valentine's Day surprise

As couples across Indiana, and across the country, celebrate Valentine’s Day this week by presenting chocolates, candies, and other sweets to their sweethearts, we are reminded once again of the sour affect that the U.S. sugar program has on businesses and consumers.

The federal government’s sugar support program is a complicated system of marketing allotments, price supports, purchase guarantees, quotas, and tariffs. This Depression-era program actually raises the price of sugar paid by U.S. manufacturers and consumers, reducing domestic food production, employment in confectionery businesses, and opportunities for U.S. exports.
 
In sugar land, prices are set by the government, not the market. Each year, the U.S. Department of Agriculture determines “marketing allotments” to assure domestic producers at least 85 percent of the domestic sugar market. The government also limits imports, to help keep prices inflated far above world levels. If U.S. sugar prices fall below the official level, a price-support system of “loans” to processors ensures that 'Big Sugar' gets its federal share. The recipients get their loans in taxpayer dollars, but can repay them in (what else?) sugar.

The United States historically is not self-sufficient in sugar and there’s usually plenty available on world markets. But, American buyers can’t take advantage of this lower-priced sugar, thanks to strict import quotas, set individually by the federal government for 40 different countries.
 
And who benefits from these expensive, job-killing programs? A handful of sugar beet farms in some Northern states and sugar cane farms in Gulf states and elsewhere. But, the biggest winners are a handful of huge industrial operations that cover thousands of acres.
 

This sweetheart deal for sugar producers is a sour one for businesses and consumers. Food and candy manufacturers are prominent victims, but also hurt are hundreds of thousands of small businesses, including confectioners, bakeries, and restaurants. It makes no sense to place extra costs on small businesses, the main engines of job growth.
 
It imposes a hidden tax of billions of dollars annually on consumers and businesses and has destroyed thousands of U.S. manufacturing jobs. It substitutes the federal government for the private sector in basic decisions about buying and selling, supply and price.
 
A recent study by Iowa State University shows how reform of U.S. sugar policy would help Indiana and America – from consumer benefits to the generation of new jobs. The study found that consumers could save up to $3.5 billion a year on a wide variety of food products. In addition, as many as 20,000 additional jobs could be created each year in the food sectors – an expansion of 3 percent.
 
Sugar producers argue that their distorting program is “no cost” because they don’t receive direct government payments. Instead, businesses and shoppers bear the burden for this welfare system.
 
Legislation has been introduced in the United States Senate and House of Representatives that would end this job-killing, market-distorting monstrosity. Given our fragile national recovery and the clear need to roll back government overreach, we remain hopeful that members of Congress will help us prevail, and end the sugar system once and for all.
 
Sugar reform is an essential next step in letting farmers, businesses, and markets work without government involvement. That would be a very special Valentine’s gift that Congress could give the country.
 
Indiana Senator Dick Lugar is the most senior Republican on the Senate Committee on Agriculture, Nutrition and Forestry; Scott Albanese is the President of Albanese Confectionery Group, Inc. of Merrillville, Indiana.
 

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