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Sink the Sugar Boondoggle

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The federal government has gone into the sugar-mountain business. The Agriculture Department (USDA) is paying more than a million dollars a month now to store piles of surplus sugar. USDA spent almost half a billion dollars on the sugar program last year — and federal generosity promises to make the sugar program worse.

Domestic sugar production set a record last year and is on pace to set another record this year. This is a fiasco, since sugar is America’s least competitive and most heavily subsidized crop. The federal government rewarded farmers for plowing under tens of thousands of acres of sugar beets last year to try to stabilize the domestic sugar market — to no avail.

The General Accounting Office estimates that the sugar program costs American consumers almost $2 billion a year. The sugar program is a great inflationary success: sugar costs twice as much in the United States as it does on the world market. High federal sugar-price supports combined with strict import quotas ensure that Americans suffer shakedowns at the grocery checkout.

The federal government strives to isolate the United States from the world sugar market. Sugar imports have been slashed by more than 80 percent in recent decades. Ray Van Driessche, the president of the American Sugarbeet Growers Association, offers an easy solution to the current sugar quagmire: “Trade policy problems are at the core of our oversupply situation.” In other words, further slashes of imports — thus allowing producers to more easily gouge consumers — will solve every problem.

Restrictions on sugar imports harm other Americans. The United States used to have a vigorous sugar-refining industry — but since 1981, 10 sugar refineries have closed because of decreased sugar imports. The high price of sugar also undermines exports of American-made food that contains sugar. Richard Daley, the mayor of Chicago, recently announced that he would begin lobbying Congress to end the sugar program because of the damage it is imposing on candy companies. The number of jobs destroyed by sugar quotas exceeds the total number of sugar farmers in the United States, according to a Commerce Department study.

The sugar program is disrupting rural America by creating financial kingpins. The General Accounting Office estimated that 17 of the nation’s largest sugar-cane farmers received more than half of all the benefits provided by the sugar-cane subsidies. Nationwide, 1 percent of sugar growers captured almost two-thirds of the program’s benefits. Sugar farmers collected a subsidy more than 30 times larger per acre than did wheat farmers. The massive de facto subsidies that sugar-cane and sugar-beet growers receive allow them to bid up farmland rental values and drive relatively unsubsidized farmers off the land.

U.S. sugar policy also holds hostage some of the nation’s most competitive farmers. As the Coalition for Sugar Reform (CSR) — an organization of 18 consumer, environmental, business groups, and taxpayer advocates — observed, the recent trade summit in Quebec “demonstrated that developing countries are unwilling to open their markets to our pork, corn, and other agricultural products as long as we keep our sugar market closed to their sugar exports.”

The government’s handouts to farmers are hell on alligators. Sugar producers have a starring role in poisoning the Everglades. Because the U.S. mainland does not have a natural climate for sugar production, farmers compensate by dousing the land with chemicals to artificially stimulate production. More than 500,000 acres of the Everglades have been converted from swampland to sugar fields. Over the years, phosphorous from the fertilizer used by sugar growers leached into the water of the Everglades and helped destroy the ecosystem of the entire region. The federal government has repeatedly torpedoed efforts to make the sugar industry bear the cost of an Everglades cleanup.

The federal sugar program is a quixotic war against Mother Nature. Sugar is cheaper in Canada than in the United States primarily because Canada has almost no sugar growers — and thus no trade restrictions or government support programs. Third World nations have an overwhelming competitive advantage in sugar production because of climate, lower costs of land, and the availability of cheaper labor. The only thing that could make American sugar-cane farmers competitive is massive global warming.

Sen. Richard Lugar (R-Ind.), the chairman of the Senate Agriculture Committee, recently declared that “the sugar program is becoming increasingly unmanageable and that radical reforms are needed urgently.” The House of Representatives came close to abolishing the sugar program in early 1996. But the Clinton administration held the line for perpetuating the existing import quotas and price supports. If the Bush administration invested some elbow grease, the sugar program could find itself six feet under in a boondoggle graveyard.

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    James Bovard serves as policy advisor to The Future of Freedom Foundation. He has written for the New York Times, The Wall Street Journal, The Washington Post, New Republic, Reader's Digest, Playboy, American Spectator, Investors Business Daily, and many other publications. He is the author of a new e-book memoir, Public Policy Hooligan. His other books include: Attention Deficit Democracy (2006); The Bush Betrayal (2004); Terrorism and Tyranny (2003); Feeling Your Pain (2000); Freedom in Chains (1999); Shakedown (1995); Lost Rights (1994); The Fair Trade Fraud (1991); and The Farm Fiasco (1989). He was the 1995 co-recipient of the Thomas Szasz Award for Civil Liberties work, awarded by the Center for Independent Thought, and the recipient of the 1996 Freedom Fund Award from the Firearms Civil Rights Defense Fund of the National Rifle Association. His book Lost Rights received the Mencken Award as Book of the Year from the Free Press Association. His Terrorism and Tyranny won Laissez Faire Book's Lysander Spooner award for the Best Book on Liberty in 2003. Read his blog. Send him email.