Uncle Sam is effectively the ringleader of a sugar cartel. As a result, both American families and businesses ranging from bakeries to breakfast cereal producers face sugar costs that are often twice that found on the international market.
The cost of this policy to consumers is considerable, with recent research from the American Enterprise Institute placing the toll for households at $3.4 billion to $4 billion.
While households may have little choice but to pay the higher prices, some companies have opted to close factories in the United States and move operations to Canada or Mexico, where the price of sugar is far lower. In 2002, Kraft Foods announced the closure of its Life Savers plant in Michigan and relocation to Canada, with the estimated $90 million it would save in sugar costs over 15 years figuring prominently into the decision. Even smaller candy makers such as Los Angeles‐based Adams & Brooks, Bob’s Candies of Albany, Ga., and, yes, Spangler Candy have all shifted some of their production to Mexico in order to remain competitive.
“I just got tired of paying welfare to Big Sugar,” said the president of Bob’s Candies in explaining his decision to open a plant in Reynosa.
Detailed analysis supports such anecdotes. The Wall Street Journal notes that total confectionery employment saw a 22 percent decline in employment from 1998 through 2011, and AEI’s latest research estimates that the sugar program results in an annual loss of 17,000 to 20,000 food industry jobs. A Commerce Department study, meanwhile, found that artificially inflated U.S. sugar prices result in three confectionery jobs being lost for each sugar growing and harvesting job saved.
A survey of some of the country’s best‐known economists found 38 of 39 in agreement that trade barriers used to restrict the sugar supply raise the profits of sugar producers and make U.S. consumers pay more.
Faced with such voluminous evidence, defenders of the sugar program attempt to shift the conversation. Citing an alleged need for price smoothing, they insist that the bureaucrat‐driven program is better positioned than market forces to balance supply with demand. Another oft‐heard claim is that the program should not be dismantled in the face of market distorting mechanisms employed by other countries—effectively making the United States a hostage to bad policies enacted in foreign capitals. Sen. Marco Rubio, R‐Fla., has even risibly argued that the preservation of the sugar program is a matter of national security.
The thin rationales offered for why the sugar program should be maintained underscore the urgent need for its deep reform, if not outright abolition. Bipartisan legislation introduced in both the House and Senate late last year, the Sugar Modernization Act of 2017, offers some hope in this regard. Although the bill keeps more of the program intact than is desirable, it probably constitutes the most politically realistic means in the near‐term of reining in this Washington swamp creature.
This has gone on for too long. It’s time for Washington to get out of the way and leave sugar in the hands of the free market, instead of bureaucrats.