New Study Shows Sugar Policy Changes Would Cost $1.3 Billion a Year

Published online: Jul 07, 2006 American Sugar Alliance
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WASHINGTON-A plan being touted by some large food manufacturers to scrap America's no-cost sugar policy in favor of subsidy checks for sugar producers would cost taxpayers $1.3 billion a year, according to study released today by McKeany-Flavell Company. "Converting the U.S. Sugar Program from the current price-support approach to a `standard' payment program would result in a dramatic drop in producer price and income, and at the same time would significantly raise costs to U.S. taxpayers," the study concluded. Given this hefty price tag and current budget deficits, few Members of Congress seem to support overhauling the existing sugar program. In the most lopsided sugar policy vote ever taken in the U.S. House of Representatives, lawmakers overwhelmingly derailed an amendment on May 23 that would have weakened the current program. "The existing sugar policy is popular, it doesn't cost taxpayers a dime, and Congress should extend it," American Sugar Alliance economist Jack Roney told Congressional staff at a briefing about the new study. "It would be lunacy to trash a successful no-cost program for an unproven program that would cost $1.3 billion a year." Most Americans agree. Sixty-two percent of Americans said they thought the current sugar program should be continued, according to a Harris Interactive poll released last month. Only 16 percent favored the subsidy program that many industrial sugar users seem to be backing. Lobbyists for large food manufacturers argue that sugar prices would fall under the sugar subsidy check system. But the study suggests these price savings would not translate into cheaper candy bars for grocery shoppers. "Consumers would see little or no benefit from lower sugar prices, as food manufacturers historically have not passed savings from lower input costs along to consumers," the study found. The study also found that, contrary to statements by some sugar policy opponents, "the movement of some food manufacturers to foreign countries appears to be more closely related to potential savings on labor and other costs than to U.S. sugar prices." McKeany-Flavell is a renowned commodities research firm from Oakland, Calif. that has specialized in the ingredient industry for nearly 60 years. The company has provided research and industry analysis for more than 70 national and multinational food and beverage companies. American Sugar Alliance | 2111 Wilson Boulevard | Suite 600 | Arlington, VA 22201 Tel: 703.351.5055 | Fax: 703.351.6698 | Email:info@sugaralliance.org