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Marco Rubio’s continued defense of the economically indefensible US sugar program

November 10, 2015

By Mark J. Perry

Sen. Marco Rubio’s (R-FL) continued defense of Big Sugar’s indefensible legal plunder of American sugar consumers to the tune of billions of dollars every year has been rightfully criticized recently, here are two examples.

1. A WSJ editorial last week (“Rubio and Big Sugar“) claimed that the Florida Senator is defending what may be the worst farm subsidy:

There is no economic defense of the sugar program, which every year provides nonrecourse loans to sugar processors at a guaranteed price-per-pound. If the market price is below the guarantee when they want to sell, the processors simply dump the crop on the U.S. Department of Agriculture as the loan repayment. To avoid that outcome, the USDA holds sugar prices artificially high by imposing tariffs on imports above an annual quota. The result is that Americans pay about twice what the rest of the world pays for sugar.

2. Tim Carney wrote last week in the Washington Examiner (“Marco Rubio needs to get past his sugar problem“), emphasis mine:

Marco Rubio is a conservative senator with a record of opposing corporate welfare in all corners of the economy, except one. That would be in the swampy fields of South Florida, where they grow sugar cane. Rubio supports the federal sugar program, with its special cheap loans and its blatant protectionism. This is to the detriment of U.S. consumers and foodmakers, and to the benefit of a handful of sugar magnates, including some of his earliest fundraisers.

Amidst the jungle of crony capitalism, corporate welfare, and federal boondoggles that Congress has created, the sugar program may be the least defensible.

That recent commentary about Sen. Rubio and Big Sugar prompted me to update my previous estimates (see the last one here) of the annual cost to American consumers of sugar that results from the US sugar program (aka the “sugar racket”):

The chart above displays annual refined sugar prices (cents per pound) using data from the USDA (Tables 2 and 5) between 1980 and 2015 for: a) the U.S. wholesale refined sugar price at Midwest markets, and b) the world refined sugar price. Due to import quota restrictions that strictly limit the amount of imported sugar coming into the U.S. at the world price, the domestic producers are protected from more efficient foreign sugar growers who can produce cane sugar in Central America, Africa and the Caribbean at half the cost of beet sugar in Minnesota and Michigan.

Of course, there’s no free lunch, and this sweet trade protection comes at the expense of American consumers and U.S. sugar-using businesses, who have been forced to pay twice the world price of sugar on average since 1980 (29.2 cents for domestic sugar vs. 14.9 cents for world sugar, see chart). How much does this trade protection cost Americans?

Read the full article at the American Enterprise Institute: Marco Rubio’s continued defense of the economically indefensible US sugar program

Issue Categories : Corporate Welfare, Marco Rubio