Attack on big sugar long overdue

The US has protected its sugar producers almost since it has existed. But those protections have long since lost any justification. Photo / Thinkstock

Now that they have critically (and foolishly) wounded the US Export-Import Bank, Grover Norquist and his allies in the conservative gadfly movement are taking aim at a far more formidable (and worthy) target: Big Sugar.

The US has protected its sugar producers almost since it has existed. But those protections have long since lost any justification. US consumers now pay close to double the world price for sugar; ending US support for sugar producers could put as much as $3.5 billion a year back in consumers' pockets. This fiercely defended thicket of tariffs, price supports and quotas undermines US development aid, corrupts the country's politics and distorts global trade. It also enriches a coterie of sugar barons at the expense of public health.

This protection racket for sugar producers is a worldwide phenomenon. The European Union's support of beet farmers means that Europeans pay a premium for sugar. Brazil, the world's biggest sugar producer, subsidises sugar via ethanol programs. Price guarantees for growers and import tariffs are common around the world.

US producers argue that dismantling US protections would amount to unilateral disarmament, flooding the country with cheap imports of subsidised sugar. Yet the goal of dismantling US protections is not to create more jobs in the confectionary business or get more sugar into the American bloodstream. (Americans already lead the world in that respect, to their detriment.)

But there are policy and market rationales for ending sugar subsidies. The global patchwork of protectionist measures has helped feed a sugar glut, with prices lower than they've been in six years. Perverse consequences abound: The EU's impending "reforms" of its sugar policies, for instance, will end production caps while doing nothing about subsidies; as a result, millions of sugar growers in less-developed countries could be pushed deeper into poverty.

To take an example nearer and dearer to US taxpayers and consumers, would you rather let Guatemala, Honduras and El Salvador sell you more raw cane sugar, or give them more US aid dollars?

In announcing his campaign against Big Sugar, Norquist called it "cronyism in its undiluted, inexcusable majesty." There's truth to that: The sugar industry lobby accounts for more than one-third of all lobbying funds spent by crop producers, even though sugar represents less than 2 per cent of the value of all US crop production.

Most of the benefits of high prices flow to three firms that produce about 20 per cent of US sugar supply. The sugar lobby not only won new industry protections in the 2008 farm bill, but also ensured that they remained unscathed in the 2014 version.

Norquist can often go too far - his quest to destroy the Export-Import Bank was unhelpful, as is his biannual no-tax pledge - but this campaign is worthwhile. It could energise reformers in Congress who have long railed against sugar subsidies. It coincides with pressure on US negotiators to allow Australia and other Trans-Pacific Partnership members greater market access on sugar. If it even partly breaks down the US sugar wall, it would be a sweet victory for taxpayers and consumers alike.

- Bloomberg