The U.S. Sugar Program: All Tricks And No Treats For Consumers This Halloween

Johnathan Sargent Federal Affairs Associate, Americans for Tax Reform
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This Halloween, millions of costumed children across the country will embark upon the hallowed tradition of trick-or-treating. On this night, candy execs are filled with delight and dentists with fright, as children bring home their haul for the night. However lurking just beyond the shadows is something else grinning with great might, “Big Sugar” cronyism, and a U.S. Sugar Program that’s simply not right.

Beyond the costumes and decorations there is a growing and often overlooked cost to Halloween. As consumers watch trick-or-treaters go by, they likely miss the true terror on All Hallows’ Eve. It’s so slight you may not have noticed, but this year those Reese’s Pieces and candy corn are just a bit more expensive thanks to sugar subsidies and crony greed.

In fact for years the price of candy in the U.S. has steadily increased. This year, according to the National Retail Federation, Halloween spending will be at an all-time high of $8.4 billion, with over $2.5 billion going directly to candy sales. The more than 170 million Americans who plan on celebrating Halloween will on average spend $82.93 this year, up almost $9 from last year. However, it is not the candy companies that deserve the blame, but those great monsters lurking in the dark: “Big Sugar” and Uncle Sam.

For nearly a century the price of sugar in America has been ruled by crony capitalism. Thanks to the U.S. Sugar Program, the sugar industry gets a true sweetheart deal: billions of dollars in profit at the expense of both taxpayers and consumers.

What began as a Depression-era program has become enshrined agriculture policy and been allowed to thrive for the past 80 years. Thanks to a complex system of import quotas, prices floors, and taxpayer backed loans to prop up domestic growers, who number less than 4,500, the sugar industry has been able to not only receive subsidies from taxpayers, but ironically reward them with increased costs for sugar.

Under the U.S. Sugar Program, the Department of Agriculture provides loans to sugar farmers with the stipulation that should the price of sugar fall below a certain price farmers may repay those loans with raw sugar. All of the sugar that is received by the federal government is then sold to the ethanol industry, in most cases for a loss.

This program is in effect a “mass purchase of sugar” that costs consumers and taxpayers. Due to the nature of this program it is classified as an “indirect subsidy” and as a result the true costs remain a mystery. This allows politicians to join the sugar industry in the shadows by making them immune from public criticism and detached from accountability.

The U.S. is both the 5th largest producer and consumer of sugar. However, because of the protectionist policies of the federal government, we pay far more than the rest of the world for sugar. Currently, Americans pay a price of almost 30 cents per pound for sugar, roughly 20 percent higher than what the rest of the world pays.

As a result of the U.S. Sugar Program, it is estimated American families pay an average of $125, or a total of $2 billion, in higher grocery prices and taxes annually. For instance the U.S. Sugar Program cost taxpayers nearly $300 million in 2013, according to the Congressional Budget Office (CBO), and is projected to cost taxpayers an additional $138 million over the next 10 years.

This protectionism has led not only to higher costs, but also lost jobs. Each year approximately 10,000 jobs are lost because of the U.S. Sugar program, with over 125,000 being lost since 1997. Estimates show that for every one sugar-growing job saved by high U.S. sugar prices, approximately three U.S. manufacturing jobs are lost. If continued, the program puts over 600,000 American manufacturing jobs in jeopardy across the country.

The protectionist policies of the U.S. sugar program help only a small group of wealthy sugar producers at the expense of taxpayers and consumers. In 2018 the Farm Bill is up for re-authorization. Big Sugar will undoubtedly once again dole out sweet treats and cast a spell over Congress to keep its generous subsidies. It seems like this year, and realistically for the last hundred years, the sugar industry has been able to both trick taxpayers and get billions of dollars in treats for itself.