Commentaries Aplenty On The Wisdom, Fairness U.S. Sugar Industry Protections

Here are some beets I photographed, growing near Fairfax, Minn., in July 2013, for the Southern Minnesota Beet Sugar Cooperative at Renville, Minn.

There are lots of commentaries out there on the U.S. sugar program these days. The industry is a stalwart, signature crop in the Red River Valley with American Crystal Sugar Co. in Moorhead, Minn.; Minn-Dak Farmers Cooperative in Wahpeton, N.D., and the Southern Minnesota Beet Sugar Cooperative at Renville, Minn.

 I  see a writer named John Updike offer up a column on sugar for Grist, a Seattle-based online publication. Updike criticizes recent government purchases of sugar and the cost to taxpayers. From what I can find on the internet, Updike is trained as an ecologist and does some journalism.

Updike starts with a clever lead: “Trick-or-treaters in waiting take note: The U.S. Department of Agriculture is buying up a stockpile of sugar, spending about $1 per American resident on a sweet bounty that it can barely give away.

“That’s because the government has been promoting the planting of more sugar cane and sugar beet crops than the over-sugared country can bear. Meanwhile, the North American Free Trade Agreement has opened an import spigot that has seen Mexican sugar flowing unencumbered into the U.S.

“To reduce the financial burden on the agricultural companies that planted all those unsellable, diabetes-inducing crops, the USDA is going on a sugar-buying binge.”

Updike quotes a Bloomberg piece in which Arthur Liming, a Chicago-based futures specialist at Citigroup, says the government is “still supporting growers to produce more sugar than we actually consume.” Bloomberg quotes Tom Earley, an Agralytica consultant, as saying the “cost to the government of subsidizing the sugar industry” might be between $200 million and $300 million.

I might add a few observations:

  •  The USDA may be buying the sugar “stockpile,” but that’s because the Congress, right or wrong – the majority of representatives (who in turn represent all of us, yes?) – have agreed to this program and have declared it to be the people’s policy, for the security of a domestic sugar supply. We’ve done this over and over.
  • The program is promoted by persistent, effective lobby for the U.S. sugar growing and processing industry. The program passes Congress decade to decade, but is it a quid pro quo for money paid? Or is it at least partly because the sugar producers have a convincing story?
  • The U.S. sugar program is billed as “no-cost,” but this is only partly true. At times – like now – there is a cost, even if defensible. (It is like saying insurance indemnities are “no-cost” to insurance companies, even if defensible and actuarially sound.) But the same bill supports infinitely larger programs that cost taxpayer money every day, every year.
  • Earley’s estimated government’s spending of is up to $1 per American, but as little as 66 cents per American. I wonder if Earley might average that cost over all years in a farm bill.
  • Sugar “induces” diabetes?  I agree that Americans have gotten fat and there’s too much diabetes. Yes, the over-consumption of sugar is one of the contributors to diabetes. Yes, too much sugar  is bad for diabetics. A lot of things are bad for diabetics, including sedentary lifestyles.
    •  “The government is supporting growers to produce more sugar than we actually consume,” is a matter of semantics, but gives a false impression. U.S. producers in fact grow, process and market LESS sugar than the U.S. market demands. Sugar producers want to keep imported sugar out, but Congress ensures America will import a certain amount of sugar from certain Caribbean countries and Mexico, for other trade and geopolitical benefits that have nothing to do with sugar. U.S. processors and producers have made this deal out of self interest because they want to compete with the volatilities of “world price” sugar, which they label as “dump” sugar, from countries with poor labor standards, or where governments subsidize sugar production. I have seen various studies on this and I don’t know if I believe any of them.

Usually sugar protections are loudly opposed by “sugar users” – the makers of the candy bars consumed by the trick-or-treaters that Updike refers to. Sugar producers argue effectively that even if the cost of sugar were far less – even zero — candy bar costs would not come down much, if at all. They note that candy bar makers and other users are some of the richest people in the world, regardless of the sugar price. I have never seen sugar users refute either of these assertions.

One thing I do have  a strong opinion on. I think Uncle Sam would pay dearly to restore a domestic supply of sugar, a staple food ingredient, if the industry were decimated. I’d think we’d gladly pay way more than $200 million to $300 million a year. The price of a candy bar at a convenience store once a year would be a bargain.