Washington's dysfunctional agricultural policy is costing consumers again. Limits on sugar imports, designed to protect a few large sugar producers, are driving up prices in a tight market. Reports the Wall Street Journal:
Some of America's biggest food companies say the U.S. could 'virtually run out of sugar' if the Obama administration doesn't ease import restrictions amid soaring prices for the key commodity.
In a letter to Agriculture Secretary Thomas Vilsack, the big brands -- including Kraft Foods Inc., General Mills Inc., Hershey Co. and Mars Inc. -- bluntly raised the prospect of a severe shortage of sugar used in chocolate bars, breakfast cereal, cookies, chewing gum and thousands of other products.
The companies threatened to jack up consumer prices and lay off workers if the Agriculture Department doesn't allow them to import more tariff-free sugar. Current import quotas limit the amount of tariff-free sugar the food companies can import in a given year, except from Mexico, suppressing supplies from major producers such as Brazil.
While agricultural economists scoff at the notion of an America bereft of sugar, the food companies warn in their letter to Mr. Vilsack that, without freer access to cheaper imported sugar, 'consumers will pay higher prices, food manufacturing jobs will be at risk and trading patterns will be distorted.'
Officials of many food companies -- several of which are enjoying rising profits this year despite the recession -- declined to comment on how much they might raise prices if they don't get their way in Washington.
The letter is the latest salvo fired in a long-simmering dispute between U.S. food companies and the sugar industry over federal policy that artificially inflates the domestic price of U.S.-produced sugar in order to support the incomes of politically savvy sugar-beet farmers on the Northern Plains and cane-sugar farmers in the South. Most years, the price food companies pay for U.S. sugar is twice the world level.
President Barack Obama ran on the platform of change. How about changing agricultural policies which enrich the farm lobby at consumer and taxpayer expense?