Despite the difficult season many crops had last year, sugar cane and sugar beets did well. So well, in fact, that sugar has lost almost 18 percent of its value in comparison to 2008. This is bad news, but more so for the U.S. government than for sugar refining companies.

Thanks to the 1934 Sugar Act, sugar is categorized as a basic commodity. This means that the government heavily subsidizes the sugar industry, as it similarly subsidizes corn and soy agribusinesses. Due to the way the program works, rising sugar prices are necessary in order for companies such as American Crystal Sugar, Co. to repay the loans they receive from the government. Because of the bumper crop this year, however, the government is looking at losses of up to $80 million. To keep prices up, the government's plan is to buy 400,000 tons of sugar to keep it off the market. This will have the additional effect of raising the price of many foods.

This move illustrates the dysfunctional relationship between agribusiness and the U.S. government. The American Sugarbeet Growers Association claims that the sugar industry “receives no payments or subsidies from the government,” which is simply not true. There are already strict sugar import limitations in place to keep these companies afloat, and now, on top of these, the government chooses to provide millions of dollars to the companies in order to keep prices high. 

This moves only helps the sugar business, as consumers will suffer from higher food prices and wasted taxpayer money. Even candy companies will be hurt, as they will need to pay artificially high prices for their sugar. Though not unusual, this is an egregious example of the government helping its friends by hurting everyone else. And this is all happening for the benefit of sugar companies, stalwart supporters of the obesity epidemic that costs the US over $160 billion a year in medical costs.

Surely we can afford to stop shouldering the burden of sugar. The government could invest that money in subsidizing vegetables, or labeling products containing GMOs instead. But, no. Once again, the power of lobbies reveals itself, and taxpayers are stuck spending millions to help a few thousand workers keep their jobs. It seems that in the government's eye, more and more organizations are too important to fail, which seems to inevitably mean that normal people are valued less and less.

 

Reach Contributor Jaspar Abu-Jaber here.