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A deal that's much too sweet
© St. Petersburg Times, published June 18, 2000
When the federal government agreed to buy about 150,000 tons of sugar worth $60-million last month to bail out sugar producers, U.S. Rep. Dan Miller, R-Bradenton, called the practice "corporate welfare." Consumers may have harsher words in mind when they learn that the government program more than doubles the price of sugar in the United States, costing shoppers $1.9-billion a year, according to the U.S. General Accounting Office.
The criticism doesn't end there. "We hear from other farmers in our district who say, "Why should sugar get this special protection when we have to make it on our own?' " said Martin Baker, Miller's spokesman.
The apparent answer is that those growing other crops don't understand politics as well as sugar farmers. The industry is a generous donor to both Democratic and Republican candidates.
In return, sugar growers and processors are coddled. First, the government keeps the price of sugar artificially high by restricting imports and imposing tariffs on foreign sugar. Second, the government gives sugar producers loans. If the price of sugar drops so low that the producers risk defaulting on the loans, the government buys their sugar at a guaranteed price.
Such tactics inflated sugar prices enough that the government hasn't needed to buy sugar since 1985. Until last month. Now it looks as though the subsidy program could become even more costly for taxpayers.
The domestic sugar producers have further burdened the government program by increasing their sugar cane and sugar beet acreage in recent years, according to the Palm Beach Post. So the government's piles of sugar could be growing. Sugar producers say they expect the government to buy another 200,000 tons of sugar this year to protect their loans.
The sugar industry can make such careless market choices when it doesn't have to live with the consequences. But as trade agreements open markets and the federal government backs away from other crop subsidies, such behavior makes no sense. Rep. Miller is right when he says it is time to end corporate welfare for the sugar industry.
© St. Petersburg Times. All rights reserved.