You're Paying Double for Sugar

NCPA January 14, 2015

American sugar prices would be a lot lower if the government would stop interfering in the sugar market. For years, sugar cane and sugar beet farmers in the United States have benefited from a government policy that protects domestic sugar producers and keeps prices high. In the latest edition of Reason Magazine, Greg Beato explains:

• The government guarantees minimum prices for sugar, regardless of market operations.
• Eighty-five percent of the sugar market in the United States is reserved for domestic sugar producers.
• Foreign sugar producers are subject to tariffs and quotas when they export sugar to the United States.

What does this mean for consumers? Higher prices.

• A government estimate from 1993 concluded that American consumers were losing $1.4 billion annually due to high domestic sugar prices.
• A 2012 analysis by economist Mark Perry found that American sugar policy cost consumers $3 billion annually.

According to Perry, Americans -- individuals as well as businesses that rely on sugar -- have been paying double the global sugar price since 1982.

If Americans are hurt by these policies, why keep them? Beato says people should take a look at campaign contributions, as lobbying efforts from sugar farmers far outweigh the value of sugar. Of all American crop production, sugar is responsible for just 2 percent of its value. But sugar farmers? They're responsible for 35 percent of campaign contributions from the crop industry, and they're responsible for 40 percent of lobbying expenditures from the crop industry.

Source: Greg Beato, "Big Sugar Leaves a Bitter Aftertaste," Reason Magazine, February 2015.