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Apples to Apples, Sugar to Sugar

(Chuck Muth | October 8, 2013) – According to figures compiled by the United States Department of Agriculture (USDA), the wholesale cost of sugar refined in the United States in October of 1980 – the month before Ronald Reagan was elected president – was 51.77 cents per pound.

That same pound of refined U.S. sugar in August 2013 – the latest month for which figures are available – was 25.50 cents per pound.

Is anyone out there buying cakes, cookies, candy bars or ice cream cones for half what they paid 33 years ago? I didn’t think so.

This is just one example of the myths and legends being propagandized by opponents of current U.S. sugar policy; that the present system of import quotas and tariffs – not direct subsidies! – are costing consumers an arm and a leg in higher food costs.

Fact is, if you’re paying more for a Hershey bar today than you were when Reagan was elected, it’s not because of our domestic sugar program. Still, opponents claim that sugar prices on the global market today are less than the price of domestic sugar and argue that consumers would save money if only our import quotas were lifted and tariffs removed.

Well, first…that’s assuming the sweet-tooth industry would pass along the savings to consumers rather than fatten their own wallets. Not likely. Certainly hasn’t happened over the last three decades.

Secondly, the figures often cited for the global price of sugar don’t factor in the transportation costs to get it from there to here. So if you really want to compare apples to apples you need to add about 6-cents per pound into the global price, which boosts it to around 3-cents per pound above the U.S. price.

And lastly, one must make sure that the cited lower global price is for refined, not raw sugar. The raw sugar price is what refining companies such as Domino, Imperial and C&H pay to sugar farmers. That figure is naturally lower than what candy manufacturers pay for the finished product they require.

Of course, the biggest problem in shifting from an apples to oranges comparison of global and domestic sugar prices to an apples to apples comparison is the cost of government subsidies which artificially deflates the price of imported sugar. Without government intervention/support in foreign sugar industries, U.S. sugar would perhaps be the best bargain in the entire world market.

Which is why Citizen Outreach continues to support Rep. Ted Yoho’s “Zero-for-Zero” proposal in which U.S. sugar producers would agree to the total elimination of the current U.S. sugar program in return for foreign sugar-producing nations – particularly Brazil and Mexico – ending their sugar subsidy programs.

U.S. sugar farmers cannot and should not unilaterally disarm in the Sugar Subsidy War, just as Ronald Reagan refused to do with the Soviets in the Cold War.

Zero-for-Zero holds out the best hope for developing a global agreement that will usher in a true free market where we’re all comparing apples to apples. And may the sweetest, subsidy-free price win!