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Don’t Misunderstand Higher Priced Sugar


The sugar program came up at La Vida Locavore (http://www.lavidalocavore.org/diary/4641/oh-the-stupidity-it-hurts) and (http://zcomm.org/zblogs/philpott-bittman-imhoff-lappe-are-wrong-about-tim-wise/).

I raised a point that needs further clarification, so here it is, just below this general introduction.

Introduction

First, generally, the sugar program has price floors and supply management, like traditional farm programs.  No subsidies are needed if it’s run well (ie. if Price Floors are set according to a fair standard, and adequate supply reductions are implemented as needed to support those prices).

This is a special case however, as sugar is not storable in raw form, so the program ties in the processors.  It also involves some foreign countries, foreign supply management as I understand it.  Also the price floor is probably too low, but remember, grains have zero price floors since 1996.

One implication is that corn, with no price floors, then came on with cheap high fructose corn syrup to compete against sugar, placing an unnecessary burden on the sugar program.  So this relates to cheap liquid sweeteners in soda pop, and other sweeteners on down the grocery isle.

See IATP’s analysis here for more information (see appendix, etc.):  “Sweet or Sour,” (http://www.iatp.org/search/node/sweet%20and%20sour)

Being Wrong on the Farm Bill:  The Sugar Example

The free traders at the CATO institute (with help from Diane Feinstein) bash the sugar program here:   http://www.freetrade.org/node/807 (scroll down to “Sugar Protection,”) based upon misunderstandings.

Here’s my rebuttal (below).  Basically I argue that CATO’s arguments are false and antibusiness.

[1]  Price Floors are not “subsidized.”  Participants pay interest on the loans.  In general, Price Floor programs have often paid for themselves.

[2]  The sugar program insures that America makes a profit on exports of sugar, at least when Price Floors are set above full costs.  That is a positive stimulus on the economy.  Repeal of the program would mean losses on exports most years.  It would change an economic stimulus into an economic loss.  That benefits all of America.  CATOs claim that we lose sales omits the fact that we would probably almost always lose money on those sales under free trade.

 

[3]  It is not a “hidden tax” to sell products in our domestic economy at above cost rather than at a loss, as in the case of wheat, cotton, sorghum grain, barley, oats (most of the time, in terms of full costs, 1981-2013:  USDA, ERS, and add corn, soybeans and rice for the years 1981-2006).  The real hidden tax is when farmers lose money and get off farm jobs to subsidize domestic and foreign consumers, processors and CAFOs, as happens when Price Floors are too low, and subsidies don’t cover full costs, (as in the five, five year studies by USDA ERS) here:  (formerly here:  http://www.ers.usda.gov/Data/C, I have them all,) (scroll down to “Effects of Government Programs on Costs and Returns.”

[4]  Price supports are loans that are paid back with interest.  There can be no net cost, especially when programs are run well.  The government can even make a profit on the programs, as it did from the 1930s through 1948 (I have a large amount of USDA-ERS data, [4 books,] on this question, though the links seem to no longer work).  When we had these programs for grains (with no subsidies) 1942-1952 the government netted $13 million in the black, according to one analysis, as farmers paid interest on the loans (Mark Ritchie & Kevin Ristau, “Crisis by Design:  A Brief Review of U.S. Farm Policy,” [http://www.iatp.org/search/node/%22Crisis%20by%20Design%22]).  We  only have expensive farm subsidy programs to subsidize processors and CAFOs with below cost raw materials in a hidden way, (so farmers get bashed and agbiz is left hidden, off the hook, as was usually the case in the mainstream media and among progressives in the lead up to the 2008 farm bill). They don’t care that we lose money on exports as our taxpayers pay subsidies on those exports.

[5]  Users pay prices for the product above the cost of production.  This makes perfect sense.  In contrast, every other commodity measure introduced in Congress in many recent farm bills has involved America losing money on exports and partly giving away farmers commodities to “consumers and manufacturers” (at below cost).  It forced farmers to subsidize consumers, as we have for other program crops every year 1981-2006, and many other years as well.

[6  Free trade ideology seems to be more important to CATO than the central business practice of making a profit.  That’s the actual impact of their views on this topic.  Their ideology trumps business values.  This is rabidly anti-business.

For further reading see Harvie, Alicia and Wise, Timothy A. “Sweetening the Pot: Implicit Subsidies to Corn Sweeteners and the U.S. Obesity Epidemic,” GDAE Policy Brief 09-01, Medford, Mass.: Global Development and Environment Institute, Tufts University, February 2009.  Download: http://www.ase.tufts.edu/gdae/Pubs/rp/PB09-01SweeteningPotFeb09.pdf.  Unfortunately, Tim Wise is usually misinterpreted on this and related topics, so see Brad Wilson, “Philpott and Bittman are Wrong about Tim Wise,” ZSpace

Is this too hard for people to understand in our movements and in the Mainstream media?  Let us hope not.

Formerly:  Brad Wilson, La Vida Locavore, 1/8/10,

(http://www.lavidalocavore.org/diary/3052/dont-misunderstand-higher-priced-sugar).

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