Tuesday, September 06, 2011

End Import Quotas On Sugar? Watch conservatives turn and run from their principles ... by gimleteye

I just stumbled upon a 2010 editorial that appeared in the St. Pete Times, written by a professor from Pepperdine University in California, urging an end to import quotas on sugar. Pepperdine was the landing zone for former Clinton prosecutor Kenneth Starr. In other words: conservative, to the core. Economist Gary Galles joined his argument against the sugar subsidy to conservative think tank, American Enterprise Institute, and libertarian Cato Institute not to mention the Wall Street Journal editorial page. All have condemned protections for Big Sugar.

Yet Congress gives Big Sugar what it needs to continue polluting politics and the Everglades, one Farm Bill at a time.

AEI writes: "The sugar program diverts billions of dollars from American consumers to the “Big Sugar” cartel and would understandably make sense to the members of the American Sugar Alliance. But that very costly program certainly doesn’t make any sense at all for the millions of American consumers and thousands of U.S. businesses who were burdened last year alone with $4.5 billion in higher sugar costs."

The Cato Institute weighs in: "Federal sugar policies confer benefits on a small group of sugar growers, but they damage consumers and U.S. food companies. Congress has provided a sweet deal for sugar growers since it imposed import tariffs on sugar in 1789. Controls on domestic sugar production date back to the Jones-Costigan Act of 1934."

According to Chris Edwards, director of tax policy at the Cato Institute, "The sugar program also causes environmental damage." That part, Miami needs no help understanding. Big Sugar has not only polluted the Florida Everglades, its reach extends straight into downtown Miami law firms and lobbyists. Once when I was a Sierra Club activist organizing a press conference against the Homestead Air Force Base fiasco down at County Hall, the chairman of the county commission pulled permission at the last moment. I tracked back to what happened. It was a lobbyist for Big Sugar who had triggered the objection.

Cato writes: "Large areas of the Florida Everglades have been converted to cane sugar production as a result of sugar protection. That has caused damage from the related land drainage, runoff of chemical fertilizers, and the destruction of natural habitat. With all the negative effects of the sugar program, why does it survive? Because Congress often puts the interests of the favored few ahead of the general public good. In this case, sugar growers are well–organized and they protect the program by providing large campaign support to presidents, governors and many members of Congress."

Congress is hardly alone putting the interests of the favored few ahead of the general public. So does the Florida legislature. In 1996, a wide majority of Florida voters approved the "Polluter Pays Bill" requiring Big Sugar to pay all the costs of its pollution of the Everglades. Despite two Florida court rulings, the legislature continues to ignore the will of the people. Of course, when it comes to tearing the U.S. EPA into bits and pieces, the Florida legislature and GOP delegation from Florida can't move fast enough.

In 2003, Gov. Jeb Bush did the bidding of Big Sugar when he pushed a new law violated the federal consent decree and changed the specific provisions of the Everglades Forever Act, sending all the parties into federal court for nearly a decade only to prove that what Jeb Bush advocated and the legislature passed on behalf of Big Sugar was a violation of federal law. At the time, environmentalists dubbed the Bush measure, The Everglades Whenever Act. Still, the state files file one motion after another in federal court to delay the implementation of tough remedies and enforcement measures against Big Sugar.

Today, the economic crisis gives the current governor, Rick Scott, cover to slash science budgets in the state water district so that at some not-so-distant point in the future, Everglades restoration will be whatever we imagine it to be.

A cynic might be driven to tear his hair out at the persistence of the protection racket for Big Sugar. It would never happen without those sugar sprinkles of campaign cash. So while conservatives argue the rights of corporations as persons, their blind spot is big as Jupiter when it comes to cutting special interest programs like the sugar subsidy. Could the rightward turn of US politics finally do in the sugar subsidy?

Concern along this line is what drove one of the two major sugar producers-- US Sugar--  to attempt to sell its lands to the State of Florida. (We wrote extensively at the time and afterwards, how the actions of then Gov. Charlie Crist triggered retribution by US Sugar's chief competitor, the Fanjul billionaires, who prominently supported Marco Rubio for U.S. Senate. Find it in our archives under "Big Sugar".) The original deal three years ago, for 160,000 acres, withered under the relentless attack. What was in it, for the Fanjuls? They claimed it cost too much, but in fact, they figured they could drive a better deal with the lands they hold.

The calculation of the Fanjul billionaires is that maintaining the status quo-- the sugar subsidy-- really doesn't cost that much compared to the benefits. Buying influence in the state legislature and Congress is just a marketing expense. From the county commission to the White House (Alfie Fanjul is golfing partner of Bill Clinton and fundraiser for Bill Nelson), from zoning changes for power plants, to expanded rock mines in the EAA, suburban sprawl in West Palm Beach, even what is called Everglades restoration: every single movement of the dial accrues to Big Sugar's benefit. Guess which special interest will never go dry in a drought? The one that is most heavily subsidized.

So, write on: Pepperdine, AEI, and Cato. When it comes to voting on the next Farm Bill, watch how conservatives turn and run from their principles. (For the St. Pete Time's editorial, click 'read more')
End the import quotas on sugar

By Gary M. Galles, special to the St. Petersburg Times
In Print: Tuesday, March 23, 2010

For years, domestic sugar producers have profited from quotas limiting sugar imports, boosting prices to American users.

Such protectionism takes from American consumers for politically powerful sugar producers. And it is an issue now that the difference between American prices (35.02 cents per pound) and world prices (19.67 cents per pound) has reached its highest level in over a decade.

Food manufacturers have asked both Congress and the Department of Agriculture to ease the quotas (backed with a 15.36 cents per pound tariff on shipments beyond quota allowances) on behalf of sugar consumers and food manufacturing jobs. As usual, the sugar producers' lobby (including "Big Sugar" members Florida Crystals and U.S. Sugar Corp.) are responding with misleading arguments to defend its protection (aptly characterized by William Graham Sumner's description that "A wants protection; that is, he wants B's money. … A talks sentiment and metaphysics finely, and, after all, all there is in it is that he wants B's money").

Though supply restrictions have left America with its lowest sugar stocks in the 21st century, the producers' American Sugar Alliance has defended its protectionism by misdirecting the argument to the absence of a sugar shortage, which is correct but irrelevant. Shortages occur only when government holds prices below market levels. But import quotas artificially restrict supply, which increases prices.

Quotas effectively impose a steep sugar tax on consumers, with the proceeds paid to domestic producers. One result? The makers of Life Savers, Red Hots, Jaw Breakers and other candies have shifted production elsewhere in response.

Similarly, Big Sugar has attacked food processors' efforts to ease quotas as merely an attempt to boost their profits. But attacking processors' profit motives, though not their own in opposing import increases, shifts the debate away from the central fact that by far the biggest winners from lowered prices would be consumers.

Big Sugar's latest efforts build on a long line of misrepresentations. For example, when protectionism generates higher prices, so that the government won't buy up sugar to boost prices, they trumpet savings to taxpayers but ignore the massive costs of the higher prices to consumers.

But perhaps Big Sugar's most infamous misrepresentation has been its argument that, because sugar producers are assessed to pay the costs of administering the quota program, it imposes no costs on others. That claim ignores the higher costs inflated sugar prices impose on consumers, which dwarfs the administrative costs of running the program.

Producer financing of the sugar quota program has the same effect as allowing domestic sugar producers to privately hire privateers to blockade our ports against ships carrying sugar to America. Both restrict available supplies, raising sugar prices. As economist Henry George observed long ago, such protectionist policies "are as much applications of force as are blockading squadrons, and their object is the same — to prevent trade. The difference between the two is that blockading squadrons are a means whereby nations seek to prevent their enemies from trading; (protectionism) to prevent their own people from trading. What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war."

America's sugar protectionism has never been anything but a concentrated interest group — sugar producers (plus the corn and corn products industries, since higher sugar prices raise the demand for corn syrup) — using government power to keep out lower cost foreign producers and rip off American consumers on their behalf. It is a sweet deal for them only because it is such a sour deal for the rest of us.

It is long past time that Americans thought more carefully about it, to see through the sugar lobby's flimsy smokescreens, and demand an end to this inefficient, inequitable and regressive program. Then we should turn our eyes to the many other protectionist policies we maintain to reward other powerful interest groups at our expense.

Gary M. Galles is a professor of economics at Pepperdine University in California.


Anonymous said...

The facts are Big Sugar needs to go.The land needs to be reclaimed and put back to its origin which was the Everglades period.The Fanguls and U.S,Sugar have made their billions and they should clean up the mess. They bought the land for a song and deserve nothing in compensation.Poisoning the land should carry a penalty.Our elected officails are crooks selling out the future of Florida.They do not care because thet have 2nd & 3rd homes elsewhere made possible thru their sell-out ways.Its time for the FBI to arrest and convict the guilty, the bribers are as guilty bribees.If the guilty had to give up their ill gotten gains it would save the taxpayers billions.We deserve a refund.

Anonymous said...

Supressing the market price of sugar on the world market hurts Castro's government and denies them the cash to run their flawed socialist economy. I have long believed this to be the force behind the sugar subsidy,

Anonymous said...

For those interested in this, there was a very good opinion piece in the Herald this morning written by a lady named Helene Dudley addressing the farm subsidy's and the fact that so much of our food contains high fructose corn syrup, subsidized by the US Taxpayers.

I don't know if it's in the online version of the Herald yet, but it probably will be tomorrow, if not today.

Farm subsidy's to big sugar and the corn industry must stop. I'm not saying cut all subsidy's where they are needed to help struggling farmer's, but to subsidize billionaires is just enough.

I would further challenge readers to not support any candidate who is backed by donations from these two industry's - sugar & corn.

Pollo said...

Thank you so much for writing about this issue!! It's ridiculous that here and only here, it's cheaper to use high fructose corn syrup rather than sugar!

Also, maybe consider writing something about how subsidies and tax breaks are basically welfare, and that the public assistance that we're all so concerned about is literally a drop in the bucket compared to the handouts we give out to certain industries. Maybe we should drug test the sugar moguls??