Search results: sugar policy

The House version of the farm bill is in a mess right now and there is much to say about both its process (highly politicized) and content (thoughtless, mean-spirited, and just plain nasty).  I will be singling out specific pieces for comment every now and then.

Let’s start with a proposed amendment that the House soundly defeated.  AP reporter Candace Choi succinctly summarized the significance of this defeat: Big Sugar beats back Big Candy.

I’ve discussed our absurd Big Sugar policy in previous posts.

For decades, despite endless reform attempts, U.S. sugar policy has protected the interests of producers of sugar cane and sugar beets.

Basically, current policy maintains the price of domestic sugar at a level higher than the market price in order to protect politically powerful sugar cane growers in Louisiana and Florida, and somewhat less powerful—but far more numerous—growers of sugar beets.

American consumers pay more for sugar, but only an average of $10 per capita per year, not enough to get people upset.

The big losers are candy makers and other commercial users of cane and beet sugars.  Soft drink makers are relatively unaffected because they mostly use high fructose corn sweeteners.

Reps. Virginia Foxx (R-N.C.) and Danny K. Davis (D-Ill.) sponsored an amendment to the farm bill that would require the sugar industry to repay the government if and when its loan program operates at a loss.

The sugar program is not supposed to cost taxpayers any money because it keeps prices high enough so that loans get paid back.  But in 2013, prices fell and the USDA had to buy surplus sugar at a loss of $259 million. The Congressional Budget Office says that the sugar program will cost about taxpayers about $76 million over the next decade.

Nevertheless the House defeated the sugar amendment by a vote of 137 to 278.  How come?  Louisiana and Florida are key election states.  Sugar beet growers operate in practically every northern state in the U.S.

The successful fight to defeat the amendment was led by the American Sugar Alliance.  The Washington Post reports how the Alliance paid for an advertising campaign positioning the growers it represents as victims.

A full-page ad in last Wednesday’s Wall Street Journal featured a picture of two Louisiana sugar planters and the words: “Excluding us from loans available to other crops isn’t ‘modest reform,’ it’s discriminatory. Don’t cut sugar farmers out of the Farm Bill. Oppose harmful amendments.”

And so the House did.

This is only the latest episode in attempts to reform sugar policy.  Chalk this one up as a win for Big Sugar, as Candace Choi so nicely pointed out.

I can’t believe that I am writing about sugar policy again.  The Trump Administration has just gotten a preliminary agreement with Mexico about the sugar it exports to us.

Mexico says OK, (1) it won’t make us pay as much for it, and (2) it will restrict how much refined (white) sugar it sends.

This is great for U.S. sugar processors who turn raw sugar into white.  They want Mexico to send raw sugar so U.S. processing plants stay busy.

But food and beverage companies making products will have to pay more for sugar.  They belong to the Coalition for Sugar Reform, which is not happy about the agreement.

Under NAFTA, Mexico could sell unlimited amounts of sugar to us.   But our domestic sugar producers complained the Mexicans were “dumping” subsidized sugar and undercutting their prices.  In retaliation,

• We threatened to impose tariffs.
• Mexico threatened to stop buying our high-fructose corn syrup (it currently buys 80% of our HFCS).

Three years ago, we got Mexico to agree to set minimum prices and limit the amount of sugar it sells to us.  The new arrangement confirms that deal, at least for the moment.

As for us public health types, sugar policy is endlessly weird.  Domestically, we don’t produce enough sugar to meet demands so we have to import sugar from other countries.  We keep domestic prices high through quotas, buy-backs and price-support loans.  This ought to discourage consumption, but does not.

How come?  Because the higher price, amounting to billions a year overall, works out to only about $10 per year per capita.

This is not high enough to:

• Reduce sugar consumption
• Improve health
• Generate outrage

Want to read more about this?

• The  US International Trade Commission did a report in 2011 stating that a liberalized sugar trade policy would increase food sales.
• The American Enterprise Institute says higher sugar prices cost Americans almost $3 billion a year.
• Reuters: Coke, Cargill enter fray as sugar dispute threatens Mexico trade 
• Nasdaq: U.S., Mexico closer to sugar trade deal: Mexican economy minister 
• Mexican News Daily:  US sugar industry accused of lying

I”m feeling wonky this morning and can’t resist commenting on Senator Ted Cruz’s remarks about the US sugar program.

According to BuzzFeed,

while railing against “corporate welfare,” Cruz singled out subsidies for the sugar industry — a policy Rubio has consistently, and controversially, supported despite objections by free-market critics.

“Sugar farmers farm under roughly 0.2% of the farmland in America, and yet they give 40% of the lobbying money,” Cruz said in the debate. “That sort of corporate welfare is why we’re bankrupting our kids, and grandkids.”

Chase Purdy of Politico quoted Cruz as saying “I would end those subsidies to pay for defending this nation.”

Only that’s not how the sugar program works. Subsidies for U.S. sugar producers are provided by consumers, through artificially high prices, rather than by the government. Rather than direct subsidies, the sugar program involves limiting import and supporting prices, leading to U.S. sugar prices that are higher than sugar on the global market.

Politico also investigated “40% of the lobbying money.”

Forty percent of what? It’s not clear. But it’s hard to imagine any way to get there. Total spending on lobbying was $3.24 billion last year, according to data compiled by the Center for Responsive Politics. Agribusiness spent $127.5 million, or about 4 percent. The sugar cane and sugar beets industry? $9.6 million, or 0.3 percent.

I love writing about our arcane sugar policies, which do indeed involve quotas and tariffs, but not subsidies.  The USDA explains sugar policies on its website.  The important ones:

• Domestic Price Support
• Flexible Marketing Allotments
• Disposition of Sugar Owned by the CCC
• Sugar Tariff-Rate Quotas and Other Trade Measures

Sugarcane growers have their own explanation of how the system protects them.

And because politics makes strange bedfellows, the Heritage Foundation’s explains how US sugar policies gouge US consumers, costing us more money than sugar consumers anywhere else.

From a public health standpoint, higher prices for cane and beet sugar aren’t all that bad if they encourage people to consume less.

But on a per person basis, the increased cost isn’t all that much: on the order of $10 per capita per year.

This explains the lack of public opposition to the policies.  They are hard to notice at the grocery store.

It also explains why  food companies prefer using high fructose corn syrup.  It’s cheaper.  Corn production, after all, does get subsidies for crop insurance.  But then, we use corn to make ethanol.

Aren’t ag policies fun?  No wonder candidates don’t understand them.

While we are on the topic of sugars (see previous post) I saw this ad on the Hagstrom Report.  I wondered what it was about.

I went to the American Sugar Alliance website to look.

Legislation introduced by Congressman Ted Yoho (R-FL) to end global sugar subsidies in favor of a free market has picked up key endorsements in recent weeks, including many conservative organizations and numerous lawmakers.

Yoho’s bill would instruct the administration to target the foreign sugar subsidies that are distorting world prices. Once foreign subsidies are eradicated, U.S. sugar policy would be eliminated.

If I understand this correctly, Congressman Yoho is offering a trade:  If foreign governments of sugar-producing countries will stop subsidizing their countries’ sugar producers, we will stop charging tariffs on the sugar we import from them and we will end our quota system for sugar beets, both of which keep U.S. sugar prices considerably higher than world market prices.

For decades, U.S. Presidents have pledged to fix sugar policies (see my post explaining how they work), but they always get stopped by the well organized interests of the U.S. sugar industry—the producers of cane and beet sugar.

Current policies result in higher sugar prices for consumers but since the higher costs average out to only about $10 per person per year, nobody gets too upset about them.

European sugar quotas are supposed to end this year.  Whether they will is uncertain.

But wait!  Maybe higher sugar prices are a Good Thing.  Higher prices generally discourage consumption.

Clearly, these higher prices are not high enough.  This graph shows trends in the availability (not really consumption) of sugars in the food supply per capita, in pounds per year.

The good news: Total sugars have been declining in the food supply since about 2000 and now “only” amount to about 100 pounds per person per year.

Most of the drop is in the availability of cane and beet sugars (sucrose), now down to just over 40 pounds per capita.

The not-so-good news:  Sucrose (glucose and fructose) is being replaced by corn syrup (glucose) and high fructose corn syrup (glucose and fructose).

The bottom line: just about everyone would be healthier consuming less of any kind of sugar.

My Sunday (September 20) column in the San Francisco Chronicle deals with the sugar “crisis” I discussed here a few weeks ago:

Q: I saw you on “The Colbert Report” (Aug. 19) talking about sugar policy. Explain, please. I don’t understand why sugar policy is a topic for Comedy Central.

A: Neither did I until I saw Stephen Colbert douse himself with 5 pounds of sugar over the impending “crisis.” We have a sugar crisis? According to processed food manufacturers, we are about to run out of sugar. Horrors!

Earlier in August, Kraft and other food processors asked the U.S. Department of Agriculture to raise the quota on sugar imports. Sugar availability, they complained, is the lowest in years and it’s the USDA’s fault.

The USDA firmly controls amounts of sugar (sucrose) produced by American cane and beet growers through quotas. It even more firmly controls sugar imported from other sugar-growing countries through quotas and tariffs. And as corn is increasingly diverted to biofuels, less high-fructose corn syrup (HFCS) is around to make up the shortfall.

Should we worry?

The shortage is no crisis. At worst, it is temporary and will end as soon as the 2009 harvest is in. But processed food makers are right about one thing: Sugar is the most absurdly protected agricultural commodity in America.

For decades, no matter what it cost on the world market, quotas and tariffs ensured that Americans paid two or three times as much for sugar. High sugar prices cost American consumers about $3 billion a year. But because this works out “only” to about $10 per year per capita, nobody much cared.

If you think of $10 as trivial, you won’t give sugar protectionism another thought. But if you look at this system as an unnecessary transfer of $3 billion a year from 350 million Americans to a few thousand sugar growers and processors, you can understand why sugar policy is ripe for satire.

Here’s how the system works:

Quotas allow U.S. producers to grow only specified amounts of sugar cane and sugar beets each year, for which the USDA guarantees a higher-than-market price. Beets get 55 percent of the quota; cane gets 45 percent. The quotas are fixed. If you want to grow sugar beets in your backyard and sell the sugar to USDA at the favorable support price, too bad for you. You only get a quota if you already have a quota.

As for tariffs, the 2008 Farm Bill requires 85 percent of total sugar in the United States to be produced domestically, and allows only 15 percent to be imported. That 15 percent is distributed through quotas awarded to about 20 countries.

Above and beyond the quotas, imported sugar is subject to high tariffs. Mexico is an exception. Under NAFTA, Mexico gets to sell us as much sugar as it wants at the favored price. However, few countries in Africa hold quotas. What if you are an African cane-growing country and want the high quota price for your sugar? Not a chance.

Imports are never supposed to top 15 percent, so the USDA can’t increase the percentage. But we participate in the World Trade Organization, which obligates us to take world market sugar. Oops. These policies don’t match. Processed food makers must think the contradictions will allow the USDA to let in more sugar. Maybe, but the legalities are not yet decided.

Mind you, sugar producers and processors love this system. They argue that it keeps jobs in rural America and eliminates dependence on foreign sugar imports. To make sure nobody scrutinizes the system too carefully, they formed cooperatives to avoid antitrust laws.

Sugar producers are among the most generous and equal-opportunity contributors to congressional election campaigns, giving to both Democrats and Republicans. For decades, administrations of both parties have tried to end sugar supports. No such luck.

A shift’s brewing

Policies may change, because the gap between the prices for domestic and world market sugar – and for high fructose corn syrup – has narrowed recently. Sugar is now at war with HFCS. As HFCS is increasingly known as a key junk food ingredient, manufacturers are rushing to replace it with sucrose, which they can tout as “natural and unprocessed.”

Other sugar issues are also ripe for comedy. Most sugar beets are now genetically modified, leading many companies to avoid using beet sugar. In the South, sugar cane production pollutes the Everglades, which is costing billions of dollars to clean up. Investigative reporters are riveted by the feudalistic labor practices of sugar plantations.

And then there’s Cuba. Until the Castro revolution, that’s where we got most of our imported sugar. When relations improve, will Cuba get a sugar quota?

If sugar is responsible for any true crisis, it is because of its role as an ingredient in processed foods. Cheap sugar reduces the cost of candy and soft drinks. Cheap junk foods are highly profitable. Otherwise, our sugar policies make no sense in today’s global marketplace.

But we would be healthier eating less sugar, anyway. So here’s my solution to the non-crisis: Eat less sugar!

The Global Food Institute at George Washington University has a new report out: Changing the Default: A Policy Roadmap for Reducing Added Sugars in U.S. Children’s Diets,  by Fielding-Singh, P., D. Cherlin, and M. Maitin-Shepard.  June 2026.

What the report is about:

American children today consume far too much added sugar, and it is harming their health. The 2025-2030 Dietary Guidelines for Americans set the most ambitious target yet for reducing this intake. This brief offers a policy roadmap for what it would take to make meaningful progress toward it.

It calls for reshaping the food environment to help kids eat less sugar.  Its recommendations focus on educating families, but also setting higher school nutrition standards and reshaping sugar supply and demand.

Here’s why this matters:

The advice:

• Reduce sugars in the food supply.
• Tax sugary drinks.
• Restrict marketing of sugary foods and drinks to kids.

Comment

It’s a clear, succinct report with lots of good suggestions.

If only they could be implemented.

Get to work!

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University of California Press has just announced the forthcoming publication of my next book in September.  This one is co-authored with Lisa Sutherland, a former vice president of Kellogg, currently interim president of Jacksonville University.  We had a great time doing it.

From the publisher:

If you want to understand how the food business works, just have a look at a box of breakfast cereal. Hardly anything on supermarket shelves is bigger, bolder, or more deliberately designed. The fiercely competitive industry that brings us Cheerios, Froot Loops, and Trix sells a distinctly American dream: indulgence and health in one convenient package.

Cereal boxes chronicle our shifting national obsessions with health, ingredients, dietary advice, and American culture. They show us what sells food: cartoons for kids, athletes for men, weight loss for women. And hidden in the history of cereal package designs, we find clues to the corporate lobbying that shapes agricultural policy, health claims, and labeling regulations.

Sugar Coated unboxes the influence of cereal companies on food policy and the power of marketing, revealing, in the process, why Big Food is so good at selling profitable products regardless of their effects on health.

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