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Issues >
Choice
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The
U.S. Department of Agriculture (USDA) administers the federal
sugar program, which provides price supports for domestic sugar
producers. These price supports cost both consumers and taxpayers
money. At times during the past year, the government's set price
for sugar was three times the world market price. The sugar program
supports domestic sugar prices by offering loans to sugar processors
at rates established by law - 18 cents a pound for raw cane sugar
and 22 cents a pound for beet sugar. The sugar serves as collateral
for the loans. However, if the market price of sugar drops below
the loan rate, producers can simply forfeit their crops or pay
back to the government only what the sugar is worth on the market
at the time of repayment. In
addition, the sugar program maintains artificially high sugar
prices by restricting the amount of sugar that can be imported
at a low tariff rate. According to a June 2000 General Accounting
Office (GAO) report, these subsidies cost consumers about $1.9
billion in 1998. Yet, the artificially high prices did not prevent
the forfeiture of crops by farmers that defaulted on their loans.
Furthermore, for the first time this year, the USDA paid producers
directly to buy back surplus sugar. These forfeitures and buybacks
cost taxpayers at least $400 million in fiscal year 2000. Green
Scissors Proposal Current Status On
July 20, 2000, Senator John McCain (R-AZ) offered an amendment
to the fiscal year 2001 Agriculture Appropriations bill (H.R.
4461) to prevent the sugar program from operating during fiscal
year 2001. Cosponsors included Senators Judd Gregg (R-NH), Charles
Schumer (D-NY), Richard Lugar (R-IN), Sam Brownback (R-KS), and
Peter Fitzgerald (R-IL). The amendment was tabled, 65-32. A
last minute addition to the Agricultural Appropriations bill
designates all loans to sugar producers as "non-recourse
loans." Representatives Dan Miller (R-FL) and George Miller
(D-CA), as well as Senate Agriculture Committee Chairman Richard
Lugar (R-IN) all objected to the provision but were unsuccessful
in removing it. The sugar program encourages overproduction, which has left taxpayers holding the bag. In fiscal year 2000, the government paid sugar producers more than $400 million of taxpayer money for forfeited and surplus sugar. The government now owns 1.1 million tons of this crop, which it must dispose of in the world market. The sugar industry has always claimed that their subsidies do not directly cost taxpayers any money. That claim is now obviously false. This program is corporate welfare. In an earlier report, the GAO found that 42 percent of the sugar benefits went to the most profitable 1 percent of sugar farms, which are large corporations, not family farmers. Program Hurts the Environment Continued price supports for sugar threaten Everglades restoration. Sugar production in southern Florida has disturbed the fragile Everglades ecosystem by disrupting water flow and dumping pollutants like phosphorus into the waterways. Congress passed the $7.8
billion Florida Everglades restoration package to attempt to
address damage that has been caused, in large part, by sugar
farming. Sugar production helps to destroy three to five acres
of the Everglades a day. Contacts
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