Sugar's Sweet Deal

Price fixing, tariffs, and government market control. This isn't how American capitalism is supposed to work.

American foods are plagued with corn syrup. Sodas, juices, candy, snacks, peanut butter, condiments, lunch meat, salad dressing, frozen pizza, even bread, and the list goes on and on.

This isn’t the case in other countries which all still use sugar as their main sweetener. As any soda aficionado knows, Mexican Coke tastes so much better than US Coke.

Why is the US different?

Because the US government passed legislation to protect the price of sugar in the US, keeping it above world market rates at all times. This legislation also limits imports of sugar from other countries and mandates minimum prices for those imports. 

All of it at a cost to Americans.

While sugar price protections can be traced all the way back to the 1930s, what we are faced with today started when a Sugar Support Act was written into the Agricultural and Food Act of 1981. 

This measure set a minimum price for sugar through a slightly complicated federal loan program where the government will pay a fixed amount per pound of raw sugarcane, or refined sugar beets. 

The US government would lose money if the price of sugar were to drop below the fixed prices of the loans and that leads to the next part of the Sugar Support Act.

The government limits how much sugar can be sold in order to maintain the price of sugar. This provision also ensures that 85% of the sugar sold in America is domestically produced. Which leads into the third part of the Sugar Support Act.

Every country that wishes to import sugar into the US faces a minimum price they can sell their sugar for, managed through tariffs, and is limited to a specific quantity they can import, in order to preserve the ratio of domestic production.

The Sugar Support Act has been adjusted over the years, including a change in 2008 that allows the USDA to purchase sugar in order to remove it from the market. This sugar is then used in bioenergy fuel such as ethanol. This gives the USDA complete control over the sugar loans, the supply rates, and therefore the price of sugar in the United States.

To summarize the Sugar Support Act more simply:

• There is a minimum price for sugar which is guaranteed by loans

• To make sure the price doesn’t drop below that, the market supply of sugar is regulated

• To make sure foreign countries don’t negatively impact the price, they face limited imports and tariffs

• The combined effect is a higher price of sugar for Americans than the world average

Why would the US do this?

A program such as this is anti-free market and anti-consumer. If this price fixing were done by corporations it would be illegal and would essentially be creating a sugar cartel. Yet in a country that touts its capitalism daily, this program has held strong for 42 years. All to protect the owners of large sugar companies, although those owners will say it is to keep the price more stable for consumers.

Outside of Florida, the US climate is not ideal for growing sugar cane and sugar beets. This results in higher prices and lower yields of the sugar crops. However, there are many other nations that do have ideal climates. The US cannot compete with the production rate of other nations nor can the US naturally get prices as low as those other nations can.

So instead of making US companies try to compete, the government takes away the competition. While this does protect the revenue of those wealthy owners, it does so at a cost of almost $4 billion to US consumers and companies every single year.

The costs to companies were directly cited as why a Chicago Nabisco plant closed down and why other companies, such as the makers of Lifesavers, moved their production to other countries with normal sugar prices.

Another factor in all of this is that the US highly subsidizes corn crops. Most of this corn isn’t used directly as food, but instead is used both for feed for animals and for being highly processed into other products such as high fructose corn syrup.

This is why so many US products use corn syrup today. By fixing a high price to sugar and creating an artificially low price for corn, and therefore corn syrup, the US government forced companies to switch from using natural sugar in their products.

There have been many attempts to change or remove these sugar policies over the years, even by big corporations such as Coca Cola. None of these attempts have had success, even the bipartisan attempts.

Sugar companies donate millions of dollars to congressional campaigns, both Democrat and Republican alike. With that kind of money combined with little pressure from voters, the policies stay in place.

The same holds true for government food subsidies. Our nation continues to subsidize crops that are largely used for animal feed for meat production companies and crops that are highly processed into unhealthy foods.

That same allocation of money could easily go to healthy fruits and vegetables which would go a long way towards solving America’s hunger, obesity, and health problems.

None of this will change without increased pressure from the public. And there won’t be any increased pressure from the public without the knowledge that these programs exist and how they negatively impact everyday citizens.

Spread the information so we can improve our nation.