« On Savings | Main | How Pressing a Problem is Global Warming?» Don Boudreaux
June 07, 2008
Sweet Letter on a Sour Program
Don Boudreaux
Here's a fine letter from yesterday's Baltimore Sun:
The letter from the chairman of the Sugar Cane Growers Cooperative of Florida was a painful reminder that the U.S. sugar program benefits only a handful of people ("Boost for sugar is good for city," May 23).
The current price of U.S. sugar is roughly 20 cents per pound. The price of sugar on the world market is about 10 cents per pound.
Any economist will tell you that the price of our domestic sugar is artificially inflated by strict regulation of imports, a commodity loan program that forces the government to buy up any sugar that domestic producers can't sell and production controls that make it illegal for domestic sugar processors to sell more than their government-assigned allotments, even if they have buyers standing in line.
By keeping domestic sugar prices so high, the current sugar program encourages companies that use sugar in their products to move their factories to countries such as Canada and Mexico where they can buy less-expensive sugar and then just bring the finished products back here.
If you owned a factory that made candy, wouldn't you jump at the chance to cut the cost of your key ingredient in half, especially if you could do so by simply relocating a few miles across the border?
Regrettably, Congress just passed a new farm bill that makes a sweet program for sugar growers and processors even sweeter.
And by mandating a new and costly sugar-for-ethanol program, the bill will require the U.S. Department of Agriculture to purchase surplus sugar for about 20 cents per pound and then resell it to ethanol plants for less than 10 cents per pound.
The sugar program has always been touted as one with no net cost to taxpayers. But this costly new measure requires the government to give away taxpayer dollars.
This would be laughable if it were not so outrageous.
Thomas A. Schatz
Washington
The writer is president of Citizens Against Government Waste.
Posted by Don Boudreaux in Agriculture, Politics, Regulation | Permalink
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d834518ccc69e200e552ffee0f8833
Listed below are links to weblogs that reference Sweet Letter on a Sour Program:
Comments
The Toledo Blade had a good article a few years ago about the Spangler candy company (they make the dum dum suckers, and the vast majority of candy canes). They pay an extra $10,000 a day for sugar by keeping operations in the U.S.
And of course Fannie May went out of business some time back, destrying thousands of jobs in Chicago, due to high sugar prices. And another candy company in Muskegon, Michigan, etc.
But how important is all that compared to subsidizing sugar production in the Everglades, thereby subsidizing destruction of the Everglades while we're simultaneously being taxed for the restoration of the Everglades?
Posted by: James Hanley | Jun 7, 2008 12:49:43 PM
Unfortunately you can not buy cheaper sugar in Mexico. Prices are similar to those in the US or even higher, and for similar reasons.
Posted by: Ramon Mier | Jun 7, 2008 12:53:39 PM
The sugar program has always been touted as one with no net cost to taxpayers.
Except for those taxpayers that also consume sugar.
Posted by: Sam Grove | Jun 7, 2008 5:31:53 PM
In the 80's there was a comedy called Sledge Hammer. The detectives found a counterfeitter selling 2 $1 bills for a dollar. When the detectives asked how he made any money, he answered he makes it up in volume.
The government buying sugar for 20 cents per pound and selling it for 10 cents a pound is not a comedy, though it would be better for this country if congressman would all become writers in Hollywood. But no one would ever accept a script with such a stupid premise.
Posted by: MU78 | Jun 7, 2008 9:00:21 PM
In the 80's there was a comedy called Sledge Hammer. The detectives found a counterfeitter selling 2 $1 bills for a dollar. When the detectives asked how he made any money, he answered he makes it up in volume.
The government buying sugar for 20 cents per pound and selling it for 10 cents a pound is not a comedy, though it would be better for this country if congressman would all become writers in Hollywood. But no one would ever accept a script with such a stupid premise.
Posted by: MU78 | Jun 7, 2008 9:00:28 PM
"By keeping domestic sugar prices so high, the current sugar program encourages companies that use sugar in their products to move their factories to countries such as Canada and Mexico where they can buy less-expensive sugar and then just bring the finished products back here."
I was under the impression (entirely based on press reports, no particular source) that the primary effect of higher sugar prices was the substitution of high fructose corn syrup for sugar. Is that impression mistaken?
Posted by: Jared | Jun 9, 2008 1:08:20 AM
I suppose I know the answer already (interstate commerce) but I would love to hear a congressman actually try and defend this sort of law only by referencing the powers granted to the congress by the Constitution.
I would also love to hear him explain why it made any damn sense.
Posted by: Hammer | Jun 9, 2008 10:03:57 AM
The comments to this entry are closed.
