A free-market approach would ratchet down subsidies to zero
(Al Cardenas) – As farm bill negotiations get underway, the rhetoric surrounding our nation’s sugar policy is again approaching a decibel level that likely will be rivaled only by this summer’s East Coast cicada bugfest. It’s ironic, given that we were debating this same issue during a similar insect invasion 17 years ago.
Currently composed of protective tariffs and other market-manipulating policies, America’s sugar program is without question in need of reform. What’s the best, most effective way to quash this issue once and for all and achieve the outcome that the vast majority of rational individuals ultimately want — a sugar market in which everyone competes on equal footing?
Let’s assess the current cacophony.
There are the typical calls for dismantling the program — proposals supported by some of our conservative colleagues. We’d support them, too, if we thought that they would result in a true “free market.” The harsh reality is these proposals hold serious food-security ramifications. Countries such as Brazil and Mexico have marketing-distorting policies and goliath subsidies that, if left unfettered, would allow these countries to flood the U.S. market, undercut domestic sugar prices and drive U.S. producers out of business.
This was the thinking behind a farm bill amendment offered by Sen. Patrick J. Toomey, Pennsylvania Republican, and Sen. Jeanne Shaheen, New Hampshire Democrat. That amendment was struck down recently — the third time a version of the same language has been defeated in the past year because of the powerful Big Sugar lobby.
The Toomey-Sheehan approach is well-intentioned, but does not deal with current realities. Instead, we think sugar-program reform advocates should look to a strategy that many are calling a “zero-for-zero” policy.
Under this idea, U.S. trade negotiators actively target and eliminate the market-manipulating sugar policies around the world, including the subsidy checks, sugarcane ethanol mandates, tax breaks, preferential loans and all market barriers. In a market devoid of foreign subsidies, Big Sugar already has publicly pledged to put its lobbying muscle behind eliminating the domestic protective tariffs and production quotas that drive conservatives crazy.
If American producers are as efficient as they say, then the U.S. industry should thrive under a true free market. If they aren’t, then they will be forced to evolve, or they will lose market share to better business people.
Zero-for-zero will not be a quick fix, and it will take a lot of political capital to persuade Brazil and others to adopt a cease-fire — especially since Brazil is aggressively increasing its sugar subsidies right now. It is the truest free-market approach, and it is likely the quickest path to solving what we all agree is an egregious sugar-policy predicament.
Without it, we’ll probably still be trying — unsuccessfully — to make the same, old policy reforms the next time cicadas surface in 17 years.
(Al Cardenas is chairman of the American Conservative Union. This column was originally published in the Washington Times.)