For most Americans the end of Thanksgiving marks the beginning of the holiday season. America traditionally celebrates this with endless Christmas songs on the radio, camping out early at malls and department stores to get that perfect gift (or shopping online, for those of us who like to avoid this tradition), and of course candy canes.
The history of candy canes dates back over 300 years to Christmas time in Germany, while the first patent for a candy cane-making machine dates back almost 100. While this iconic symbol of Christmas saw its first mass production in America, Washington politicians have too often behaved like Scrooge, enacting policies that have sent all but one maker of this holiday classic fleeing abroad. One reason for the mass exodus is the little known U.S. sugar program.
The U.S. sugar program was born out of the same failed New Deal policies that saw the government inexplicably burn corn and slaughter livestock in an effort to artificially raise commodity prices. Government interference in the sugar market comes in four flavors: Price supports, marketing allotments, import quotas, and the Feedstock Flexibility Program.
Sweetheart Deals at Your Expense
While many Americans will be grateful for their new tablet or phone this holiday season, those gifts will pale in comparison to the Christmas present we are all quietly handing sugar producers.
Although programs such as price supports (which mandate domestic prices for sugar at nearly double the world price) are fairly straightforward, programs such as Feedstock Flexibility are far more opaque. It allows sugar producers to sell sugar to the government at above market value, which the government then sells to ethanol producers at a loss. This program alone cost taxpayers more than $100 million in 2013.
These direct costs may be the most visible to Americans, but they aren’t the only sweetheart government policies that are harming consumers. Companies that need sugar for their products—such as the aforementioned candy cane producers—can’t even import cheaper sugar from abroad thanks to import quotas that strictly limit foreign sugar. It’s no one wonder that some companies like Atkinson Candy Co have responded by moving some of their peppermint-candy production to Guatemala, where sugar is cheap and plentiful.
Don’t Chase Santa to the Tropics
While most of the New Deal agricultural programs have gone the way of the Yule log, the sugar program continues to burn consumers. Consumers pay higher prices on everything from chocolate to cranberry sauce thanks to these big-government mandates, with the estimated annual costs to consumers and food manufacturers adding up to a whopping $3.5 billion annually. Put in perspective, last year’s “Cyber Monday” consumers only spent slightly more than $2 billion shopping online.
Consumers aren’t the only ones with smaller stockings because of sugar subsidies. In fact, even those working in the sugar industry aren’t getting a very sweet deal. Since 1997, for example, over 120,000 jobs have been lost in the sugar industry. It’s estimated for every job subsidies prop up, three are destroyed, according to the Coalition for Sugar Reform. Despite this Grinch of a policy, little has been done to address these harmful effects or dial back this expensive Washington corporate welfare.
While beneficiaries of this antiquated program will likely continue to have visions of sugar subsidies dancing in their heads, consumers will continue to get coal in their stockings. It’s time to end the gift that keeps on giving for a handful of special interests…and maybe even entice a few candy-cane makers back from the tropics to boot.