Senators offer amendment to cut costs of U.S. sugar program

Published online: Jun 19, 2014
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Coddled by politicians for decades, the U.S. sugar industry is now under fire in the Senate.

A bipartisan coalition of Senators introduced an amendment today to prohibit taxpayer dollars from going to "extremely large, multi-million-dollar sugar processors through a program that has already cost taxpayers more than $250 million in the last year alone," according to a press release from Sen. Jeanne Shaheen (D-NH), who leads the group.

The others in the coalition are Democrats Mark Warner of Virginia and Dianne Feinstein of California and Republicans Mark Kirk of Illinois, Pat Toomey of Pennsylvania, Rob Portman of Ohio, John McCain of Arizona, Kelly Ayotte of New Hampshire, Susan Collins of Maine, and Dan Coats of Indiana.

The amendment, if it passes, will be attached to the agriculture appropriations bill. A vote is expected on Wednesday. Earlier this year, Big Sugar managed to keep its "sugar program"—the bevy of protections, tariff barriers, allocations, and non-recourse loans that keep U.S. sugar prices so high.

As Shaheen points out, the federal sugar program "has cost consumers and businesses an estimated $14 billion since 2008, and 127,000 jobs have been lost in sugar-using industries between 1997 and 2011." Those sugar jobs have been shipped overseas, where sugar prices are far lower than in the United States. A graph on Shaheen's website shows that the world sugar price is roughly that of the U.S.

"Our county's broken sugar program is forcing taxpayers to foot the bill for a sweet deal to a select group of sugar growers and processors," Shaheen said. "We cannot stay on this path, and our bipartisan plan would cut the wasteful practice of giving out taxpayer loans to extremely large companies.... It's time Congress finally acts."

There's no telling how much support the amendment will receive, but it seems tailor-made for Senators who want to show constituents that they are tough on wasteful spending on behalf of special-interest groups. What is so pernicious about the sugar program is that it destroys jobs, spends taxpayer dollars, AND raises prices for consumers. It's hard to find any government program that hits this kind of trifecta.

In recent years, the U.S. sugar industry has, at long last, been subject to real competition - thanks to our free-trade agreement with Mexico. Big Sugar managed to keep barriers high for 14 years after NAFTA was enacted, through an exemption. But now the exemption is off, and the U.S. companies are feeling the heat.

Their response has been to file an outrageous anti-dumping action against their Mexican competitors. Anti-dumping laws favor domestic producers, and, as expected, a preliminary decision went against Mexican exporters. But the Department of Commerce will soon weigh in on a negotiated compromise, or suspension agreement.

The anti-dumping action, plus another aimed at steel rebar, has already harmed U.S.-Mexican relations, and it's likely that Mexico will respond by trying to limit U.S. exports of corn syrup and perhaps by filing a complaint against the U.S. sugar program with the World Trade Organization.

The Shaheen amendment certainly won't end the entire sugar program, but it is an important step to take against one of the most politically protected industries in America.

"Congress can and should rein in our flawed sugar policies," said Sen. Toomey. "As a first step, let's stop using taxpayer funds on the indefensible sugar program."

Source: www.sugartradefairness.com