The federally subsidized sugar industry may have just gotten a sweet deal.
According to reports from the Wall Street Journal, the U.S. Department of Agriculture may be buying 400,000 tons of sugar in an effort tokeep sugar processing companies from default on nearly $862 million in government loans.
The companies are not identified, nor will the U.S. Department of Agriculture reveal how many companies may benefit. CNBC’s John Carney mockingly writes, “Somehow the sugar loans are a secret.”
The sugar industry has long benefited from the aid of the federal government, namely through export tariffs that artificially keep domestic sugar prices high.
“Sugar tariffs keep the price of sugar high, forcing U.S. consumers and businesses to pay 41 percent more for sugar, according to the Heritage Foundation. As a result, products like breakfast cereal, soft drinks, crackers, cookies and even beer become more expensive,” The Daily Caller News Foundation reported earlier.
It is estimated consumers pay an extra $2.4 billion on average annually, transferring$1 billion a year to sugar producers.
Despite the wealth transfer, the sugar industry still took a hit due to the over abundance of their crop this year.
“Rather than reading this as a sign that this is a business that is just too unprofitable to exist in the U.S., however, it looks like the sugar sector is going to get bailed out,” Carney continues.
The sugar industry has been a huge lobbying force in Washington for decades. Research from the Heritage Foundation shows the industry’s PACs have contributed more than all other U.S. crop PACs combined, holding 55.1 percent of the crop industry donations between 2002 and 2011.
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