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|Sugar Shortage - Marion Nestle|
Colbert Report, August 19: I was interviewed on the Colbert Report about sugar policy, of all things. U.S. sugar policy is so absurd that I did not think it could be satirized, but Colbert managed just fine. Here's what I would have said if I hadn't been completely disconcerted by his dousing himself with five pounds of sugar:
The sugar "crisis": On August 5, several groups representing makers of processed foods wrote a letter asking the USDA to raise the quota on imported sugar because stocks are lower than they have been in years. Why? Because domestic sugar production is thoroughly governed by quotas, imported sugar is thoroughly controlled by quotas and tariffs, and high fructose corn syrup (HFCS) is increasingly diverted to ethanol. Got that?
Reminder about definitions: "Sugar" usually refers just to sucrose made from sugar cane and sugar beets; it is glucose and fructose stuck together. The other major sweetener is high fructose corn syrup (HFCS). It is also made of glucose and fructose, but separated. Sucrose and HFCS work the same way in the body and are hardly distinguishable physiologically. For the purposes of this discussion, I use sugar to refer to the sweetener refined from sugar beets and sugar cane, and HFCS for the sweetener made from corn.
Sugar protection policies: Even though it amounts to only 1 percent of agricultural production, U.S. sugar is the single most heavily protected agricultural commodity. No matter what the price on the world market, U.S. sugar producers and processors get paid a high price. Historically, this price has been two to three times higher than world market prices. Although this costs American consumers $2 billion to $3 billion a year in higher sugar prices, nobody much notices because it "only" amounts to about $10 per year per person over and above what you would pay for sugar anyway.
Quotas and tariffs: These are amazing, really. U.S. producers are allowed to grow a certain amount of cane and beets each year for which they are guaranteed a price set by USDA. Beets get 55 percent of the total quota allotment and cane gets 45 percent. This works like a closed shop. If you want to start growing beets or cane for domestic sugar production, too bad. Catch 22: You only get to have a quota if you already have a quota. As for tariffs: The 2008 Farm Bill says that 85 percent of total sugar in the U.S. must be produced domestically, and only 15 percent can be imported. That 15 percent comes in through quotas distributed among about 20 countries. Any other sugar they want to send us is subject to high tariffs, except from Mexico. Under NAFTA, Mexico can export as much sugar to us as it wants to at the favored price. But imported sugar is never supposed to exceed 15 percent.
International issues: Our agreement with the World Trade Organization (Uruguay Round) says we have to take a certain amount of world market sugar. But the 2008 Farm Bill restricts imports. Oops. The contradictions in these policies still have to be resolved. The processed food people think the USDA can raise the percentage. Can it? Hmmm. We don't know this yet.
Who benefits: A few thousand beet producers in about 15 states and a few hundred cane producers, and the sugar processors. They get paid amounts that are higher than world market prices. The countries that have sugar quotas also get higher prices for their sugar quotas. Producers of sugar cane and beets love this system. Florida cane producers defend it this way: "U.S. sugar policy ensures that jobs in rural America are not sent overseas, and that American consumers are not held captive by unreliable foreign suppliers of subsidized sugar." Like American-owned sugar plantations in the Dominican Republic, for example?