New Texas A&M Study Details Importance of Current No-Cost Policy
FOR IMMEDIATE RELEASE: May 17, 2016
CONTACT: Phillip Hayes, 202-507-8303
WASHINGTON – Current legislative proposals to change U.S. sugar policy may be positioned as modest reform, but they would have dire economic consequences on U.S. sugar producers, put U.S. taxpayers on the hook, and leave U.S. consumers dependent on unreliable, subsidized foreign suppliers, according to a new paper released today by two Texas A&M economists.
“Our analysis indicates that the proposed reforms, while perhaps of some short-term economic advantage to food manufacturers, would result in significant cost to U.S. taxpayers and sugarcane and sugarbeet farmers and processors, with little or no advantage to U.S. consumers,” wrote Dr. Joe Outlaw and Dr. James Richardson, co-directors of the university’s Agricultural and Food Policy Center. “In the long-run, these reforms would undermine the food manufacturers’ stated interest in maintaining a viable, healthy, and geographically diverse sugar industry.”
The Coalition for Sugar Reform, an anti-farmer organization funded by large food manufacturers, has attempted to gut U.S. sugar policy for years in hopes of driving up profit margins for big confectioners and other sweetened product producers. Past lobbying efforts have included two separate proposals, one to unilaterally eliminate U.S. sugar policy and another to provide a $1.3 billion-per-year subsidy program.
Neither extreme approach gained traction. So the group is now lobbying the U.S. Congress to roll back several components of current U.S. sugar policy that ensure the current system operates at no taxpayer cost. Outlaw and Richardson explained:
By proposing to weaken the safety net for U.S. sugar farmers to levels that were in place when more than half of American sugar processors closed, the result would be three- fold: (1) further injury to U.S. sugar farmers and processors at those times when they require a safety net and food manufacturers are already benefiting from low market prices for sugar; (2) further depressed prices received by producers, loan forfeitures, and U.S. taxpayer costs; and (3) ultimately, a substantial loss of U.S. sugar farmers and processors and, consequently, lower domestic sugar supplies and higher prices paid by food manufacturers, which they will pass on to consumers.
The paper, which detailed how sugar policy works, also chronicled its history, noting, “The United States has provided a safety net for U.S. sugar producers for more than 200 years in response to a heavily subsidized and distorted world sugar market.”
The only policy gaps during that time occurred from 1975-76 and 1980-81 when U.S. sugar policy was not renewed. On both occasions, U.S. sugar prices skyrocketed and harmed consumers and food manufacturers, the authors explained, warning sugar policy opponents to be mindful of the past.