The Sugar Beat

The Alliance’s chief economist, Jack Roney, gives occasional information sessions to new members of the sugar industry about sugar policy and what it means to America.

It was far easier to understand than Farm Bill opponents make it out to be.  Here are just a few of the things I learned:

• The sugar industry is immensely important to the U.S. economy.  Its annual economic activity is around $10 billion, and it generates nearly 150,000 jobs.
• Sugar producers don’t benefit from direct payments from the government, as many other commodity producers do.   The USDA attempts to balance supply and demand by managing imports and domestic sales so farmers can get their returns from the market and earn a living without costing taxpayers a dime.
• U.S. consumers get a great deal on sugar. In 2008, the average retail price for sugar in the United States was 30% less than the average price for the EU and 11% less than the average price for all developed countries.
• Sugar is the world’s most volatile commodity: The average sugar price soared above 60 cents in the mid-1970s; 10 years later, the average price was less than 5 cents.  Today, it is peaking near 30-year highs again—a roller coaster that without sugar policy would harm both U.S. grocery shoppers and U.S. sugar producers.
• Even though U.S. sugar prices are higher than usual, the price rise in 2009 was less than half of the world price rise, thanks in part to U.S. sugar policy.
• When U.S. sugar prices drop (which they will), don’t expect food manufacturers to pass any savings along to consumers.  They will pocket the savings to boost profits.  Not to mention, sugar is so inexpensive—there’s only 2 cents worth of sugar in a 99-cent candy bar—that even if candy companies got the sugar for free, consumers wouldn’t see a noticeable difference at the grocery checkout.
• The U.S. sugar industry is incredibly efficient: It manages to achieve low costs of production while maintaining arguably the highest labor and environmental standards in the world.

I’m still no expert on sugar policy, but thanks to the session I attended I have a new appreciation for sugar production in the United States and the no-taxpayer-cost policy that makes it possible.