Sugar subsidies cost U.S. jobs

U.S. subsidies to sugar growers are bad policy and bad economics, observers say. The loan guarantees that Washington gives growers cost consumers $2 billion a year and are now driving manufacturing jobs out of the country.

  • Kraft Foods is moving Life Savers production to Canada – costing 600 jobs – because Canada doesn't prop up prices to protect a handful of domestic sugar growers.

  • Kraft's Montreal plant pays just over half of the U.S. price for sugar, leading to an annual savings of nearly $10m.

  • Brach's Confections is shutting down a Chicago plant, throwing 1,100 out of work.

  • Ferrara candy's expansion is focusing on new plants in Canada, Mexico and other foreign locations.

    For years, Washington has given the industry low-interest loans and curbed imports of foreign sugar. When the growers default on the loans, the government has to accept repayment in sugar.

  • Two years ago, processors dumped $400 million worth of sugar on the government – and just storing it cost taxpayers $1 million a month.

  • The Congressional Budget Office estimates defaults on sugar loans could cost $800 million during the next 10 years.

  • The new 10-year, $200 billion farm bill, repeals a requirement that sugar producers who default on their loans pay a modest forfeiture penalty – costing the Treasury $500 million.

    Since 1990, sugar growers have contributed more than $18 million to political campaigns. They don't include just sugar cane growers in, but sugar-beet growers across the Midwest and West and corn growers as well. Artificially high prices for sugar create a market for corn syrup as a substitute in products ranging from soft drinks to bakery products.

    Source: Editorial, Sugar Lobby's Clout Threatens Economic Decay, USA Today, August 19, 2002.

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    FMF Policy Bulletin\27 August 2002
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