Tuesday, November 19, 2013

I can't call you sugar, cause sugar never was so sweet

The US government is a welfare agency for farmers with an army! Take the case of sugar (please). This year, the government spent over $100 million buying up sugar to "support" its price. However, producers made so much that the price was somehow not high enough to repay the annual loans they get from the USDA. So the growers just default, to the tune of $171 million!

And and and and and and.... they get to BORROW AGAIN from the same program for next year, como si nada! So far the USDA has issued another $86 million in loans, sometimes to companies that had just defaulted.

Like Amalgamated Sugar. Defaulted on $17 million this year, borrows $18.8 million for next year. This isn't like the World Bank giving new loans to countries so they can pay off their old loans.  That's fresh cash with no strings.

And and and and and and... experts expect the producers WILL DEFAULT AGAIN NEXT YEAR!

It's not a bug, it's actually a feature of our insane farm policies.


Pelsmin said...

So I ask a top sugar lobbyist to explain this. And he tells me that foreign governments subsidize and support their national sweetener industry so extensively that they are able to sell sugar to the US at prices too low for our industry to compete. He says that if we left the US sugar makers alone they would fold, leaving the US food industry completely reliant on foreign suppliers, who could then ease their subsidies and raise prices, affecting all US food.

I hate government meddling in any industry, and I gotta believe this hurts us in the short and long run. But is there an argument to be made for continuity/security of supply? Jokes aside (about how we don't NEED to drink soda, candy, etc.) there's no question that the economic health of the food industry requires reliable access to sweeteners.
How do you handle other countries screwing things up through subsidies or currency manipulation?

Jim Oliver said...

And and and and and and since this enables them to produce more they pollute more including the Everglades.

AD said...

Pelsmin, many important U.S. products depend on exports from other countries, including exports of raw goods that just don't physically exist in the U.S. Can your lobbyist friend tell us how that has been detrimental to the U.S. and our ability to make (or buy) the goods made with those materials? If other countries want to subsidize our sugary diets, I'm glad that they're taxpayers are willing to be so generous on my behalf. If sugar prices suddenly jump up, well, then farmers in the U.S. will start growing it again. I don't see how this is a problem except for the few and organized who make a good living off of the current U.S. subsidy.

John Thacker said...

there's no question that the economic health of the food industry requires reliable access to sweeteners.

Pelsmin, the US price for sugar has been double the world price for sugar for over 40 years. It's inconceivable that the entire world has been waiting for the US to relax its complicated set of subsidies (the loan program is intended to be defaulted, as a price floor) in order to jack up prices-- and even if they did double world prices somehow (which are the same across the world, except in the US), it would still be as cheap as the current US price.

The lobbyist's arguments are ridiculously unconvincing. It's a pure cash grab on the part of US sugar (and US corn, since high sugar prices encourage more corn syrup) from the US taxpayer.

Hasdrubal said...

I thought US sugar prices were higher than the rest of the world due to strict quotas? That's why we use so much High Fructose Corn Syrup (which is more expansive than sugar anywhere else) and everyone else just uses sugar.

Pelsmin said...

John Thacker -- A good argument. I think the best part of it is that even if the US allowed the American sugar industry to fold due to dumping by the foreign suppliers, the worst they could do is jack prices back up to world market rates.
AD -- I agree, except for the practical consideration of stopping and then re-starting an entire industry. I certainly don't object to cheap foreign suppliers helping us out, as long as it's not dumping to destroy an industry we need.

Anonymous said...

I was told that sugar price supports were needed because the US agreed to buy a quota sugar from the Dominican Republic in a free trade agreement. Of course, it is the other way around the protectionist US had to purchase had to buy because of the price supports.
Pelsmin's lobbyist friend's argument supposes that all exporters will act as one. They are not monolithic, but competitors. If one raises prices, the others will swoop in and take their share.
The unseen destruction of the US's candy companies and diabetes from corn syrup adds to the cost of the subsidy.