Big Sugar Summit: Daren Bakst, Heritage Foundation
Daren Bakst is a Research Fellow In Agricultural Policy, Institute for Economic Freedom and Opportunity at the Heritage Foundation.
“The Heritage Foundation is an American conservative think tank based in Washington, D.C. The foundation took a leading role in the conservative movement during the presidency of Ronald Reagan, whose policies drew significantly from Heritage’s policy study Mandate for Leadership. Heritage has since continued to have a significant influence in U.S. public policy making, and is considered to be one of the most influential conservative research organizations in the United States.
When people get upset because our US Congressman Patrick Murphy voted for the “Farm Act” I get upset. The issue with this act is that there are sugar subsidies and food stamps in the same bill. I understand why people are upset but I could not take what little food people have out of their mouths. It’s a conundrum and for that reason they must be separated.
I want to save food stamps for another day because it is a complicated subject. There are people who need them and there are people who take advantage and we need to have a better system like input from health care workers that are actually in people’s homes. I can hardly tell someone to eat good whole foods, fruits and vegetables when they get 50 bucks a month, is 90 years old and all they can afford is stuff in a can that is full of sodium and stuff in a box that is processed and filled with sugar. I hope we can engage in that conversation one day. I do begrudge people that do not have compassion for people that out of no fault of their own cannot afford food. We have to retain our compassion. We just have to find a better way to do this. Nothing is black and white. Certainly not the lives of our elderly population.
At any rate there were cuts in food stamps.
But check this out regarding the sugar subsidy.
“Critics say U.S. sugar policy artificially inflates sugar prices to benefit an exclusive group of processors — even though it leads to higher food prices. But this year, prices fell anyway. Now, the government could be poised to use taxpayer dollars to buy up the excess sugar.
Sugar costs are a complicated combination of import restrictions, production quotas and a kind of guaranteed price.
“The U.S. sugar system is essentially a Soviet-style control on production,” says Chris Edwards, an economist at the Cato Institute.
The effect of these policies, he says, is that U.S. sugar prices normally remain artificially high — sometimes twice the world price. (Last year, the price of sugar around the world averaged 26.5 cents per pound, compared with 43.4 cents in the U.S.) That hurts food companies and leads to higher prices at the grocery store.
“The core goal of policymakers has been to push up U.S. sugar prices to the benefit of U.S. sugar growers,” Edwards says.
A big part of this policy is a sweet loan program for the processors that refine sugar. To pay growers like Gravois right away, processors can take out government loans. The sugar itself is the collateral.
This leads to an interesting choice: If sugar prices go up, processors sell it on the open market and make a profit. If prices fall, they can just hand over their sugar to the government and keep the loan money.
Representing Big Candy is Bob Simpson from Jelly Belly, who also chairs the National Confectioners Association. “We’d just like them to compete on a fair, open market without the intrusion of the federal government,” he says.
He says Jelly Belly opened a plant in Thailand, partly to get cheaper sugar for markets overseas.
Defending Big Sugar is Jack Roney of the American Sugar Alliance.
“There’s really no reason for contention about U.S. sugar policy. It’s the most successful of any U.S. commodity policy,” says Roney, who adds that in most years this program costs taxpayers nothing — unlike other farm supports.
He blames falling prices on Mexican imports which, under the North American Free Trade Agreement, are not controlled by tariffs.”
“The Agriculture Department lost $280 million on the sugar program in fiscal year 2013, with more losses expected next year. A surge of imports from Mexico has driven down U.S. sugar prices — to the point where it’s profitable for processors to take advantage of a U.S. law that lets them forfeit the sugar they posted as collateral for government loans and keep the cash. Stuck with mountains of excess sweetener, the government has two choices: hoard it until prices go up or sell it at a huge loss to the few ethanol makers willing to take it.
280 million dollars is a lot of money and would buy my gramma’s a lot of fruits and vegetables. I don’t think even the Heritage Foundation would argue with that. After all, they have gramma’s too.
So let’s have this conversation and let’s tell Congress what they need to do. Obviously they can’t figure it out themselves.
Here is Daren’s video. Please watch and lets start talking about this!