Ah, the glories of sugar politics… In case you missed it, the price of sugar in the US is up 30 percent in the last year. And, responding to heavy lobbying from commercial users of sucrose – mostly commercial bakeries and candy makers — the Department of Agriculture is allowing increased imports this year. That’s good for everyone involved (except, of course, for domestic growers of cane and beets). But it only highlights the tangled web we’ve woven by protecting the domestic sugar industry.
As crops go in America, sugar isn’t very important. Unlike grains, the US can’t export sugar: production costs are far lower in tropical countries with cheaper labor – think Brazil, India, China, Thailand, Indonesia, the Caribbean. But the domestic industry is expert at the care and feeding of Congress, and has managed to hang on to import quotas that keep the domestic price far above the world price. In the process, it has priced itself out of the giant domestic market for drink sweeteners, where high fructose syrup from corn now reigns supreme. Ironically, though, the rise of corn sweeteners has proved a serendipity for domestic sugar, since growers can now count on the support of the corn lobby in their endless battle to keep sugar prices high.
So, how much does it really matter that a package of Chips Ahoy! costs an extra dime or so? More than you might expect. First, half the domestic sugar cane is grown in economically fragile south Florida, where fertilizer runoffs are not-so-slowly destroying the Everglades. Second, the quota (along with the European Union’s even tougher protectionist policies for sugar beets) deprives poor-country producers of billions in export revenues. Arguably worse, it has become a symbol of rich countries’ unwillingness to open agriculture to global competition – and, as such, a great excuse for Third World countries to resist open trade in services and to turn a blind eye to the theft of intellectual property from abroad.
