Free Market Sugar Act challenges sugar subsidies, price controls

By | 11.15.11 | 10:32 am

A burning sugar cane field (Pic by skatoolaki, via Flickr)

A bill recently introduced by congressmen from Pennsylvania and Illinois could have a far-reaching impact on the U.S. sugar industry, much of which is based in South Florida.

Though support for the U.S. sugar industry runs high among legislators, partly due to the fact that Big Sugar continuously lines the campaign coffers of both Republicans and Democrats, there is a a tangible discontent among industries that use sugar products, who find domestic prices to be too high and, because of quotas, can only import so much.

Enter Rep. Joe Pitts, R-Penn., and Danny Davis, D-Ill., who teamed up to introduce a bill that would protect the other sweet-tooth industries: candy companies that lie within their districts.

“We’ve heard from his constituents that the price of sugar is affecting business, it’s affecting jobs,” says Pitts spokesperson Andrew Wimer, who adds that Davis, the Chicago Democrat cosponsoring the legislation, cites examples of factories that have shut their doors because of the high price of sugar.

The Free Market Sugar Act would repeal the sugar loan program and amend the Farm Security and Rural Investment Act (known as the Farm Bill), perhaps the most important piece of legislation impacting U.S. sugar interests. Written every five years, the Farm Bill helps sugar growers with farm subsidies (which some dismiss as “corporate welfare”) and a series of quotas that tightly control the supply of imported sugar, a benefit to the handful of American sugar producers who pocket around $1 billion in excess profits a year, and a detriment to candy companies that buy U.S. sugar at prices two to three times higher than the global market rate.

Federal legislation also calls for the sugar program to be operated on a no-cost basis, a provision some sugar insiders project will remain for years to come.

“In general, [the Free Market Sugar Act] seeks to reform the sugar program so that the government is not controlling how much sugar is produced and imported,” says Wimer. ”It loosens the controls on production and importation, so that the U.S. price for sugar can be more closely aligned with the world price.”

In addition to amending the sugar price support program, the bill pushes for more transparency in the sugar industry, and an overhaul of how it does business. If enacted, the bill would replace quota import provisions with a tariff rate quota. “Right now the USDA is tightly controlling how much raw cane sugar comes into the U.S.,” says Wimer. “Instead of blanket eliminating quotas, we are modifying it so it’s not as unfair to the current market.”

Pitts and Davis have also recently announced the formation of the Congressional Sugar Reform Caucus, a bipartisan group that also includes Sens. Mark Kirk, R-Ill., and Jean Shaheen, D-N.H.

Representatives from Florida Crystals did not respond to inquiries about the new legislation.

Follow Virginia Chamlee on Twitter


Comments

Switch to our mobile site