Op-Ed: This Valentine’s Day, end the not-so-sweet sugar program

It’s nearly Valentine’s Day, and love is in the air. But, one not-so-sweet policy continues to wreak havoc on consumers and candy manufacturers across the country. Thanks to a policy dating back to the New Deal era, the federal government maintains a rigid series of price controls on sugar and refuses to allow the importation of affordable, low-cost sugar from the rest of the world. As a result of this deeply misguided policy, $4 billion each year is tacked onto grocery bills to enrich a small group of politically connected sugar growers. President Joe Biden can and must get to work to cut out this confectionary con job.

The maze of protectionism, price controls, and subsidies governing the sugar industry showcases the very worst of crony capitalism. Large, politically connected sugar growers such as the Fanjul brothers in Florida have never much cared for the prospect of inexpensive, foreign competition, and have lobbied hard to keep cheap sugar out of the country. And they’ve succeeded beyond their wildest dreams, as confectioners pay 12 cents per pound of sugar more than the global average.

These pennies add up to a substantial sum as Americans purchase nearly 60 million pounds of chocolate each Valentine’s Day. All told, the U.S. sugar program costs American families an astounding $4 billion per year, more than enough money to buy a bouquet of flowers for every spoken-for Mrs. (or Mr.) in the country. But, these byzantine price controls force Americans to cut back on their purchases, to the detriment of thousands of small businesses across the country.

Baltimore, Maryland-based Wockenfuss Candies owner and president Paul Wockenfuss is reasonably concerned that strict import restrictions create an “unlevel playing field” that is “just hurting the smaller businesses.” These confectioners are forced to respond by cutting back jobs at the worst possible time.

Even as the economy slowly gets back on its feet from the coronavirus pandemic, the confectionary industry continues to be shackled by unforgiving price controls. According to a 2013 Iowa State University study, the U.S. sugar program costs up to 20,000 jobs per year even considering employment in the “protected” domestic sugar industry. Far from helping out small, struggling sugar farmers, the system of loans and quotas accrues primarily to a handful of politically connected sugar producers. An investigation by The Wall Street Journal found, “The loans went to 17 sugar processors, including the makers of Domino Sugar, Big Chief and other brands that line supermarket shelves. Just three companies … borrowed 55% of the funds, although they produce about 20% of the country’s sugar.”

Yet these companies plead poverty and warn of the dire consequences of the U.S. opening up its markets to cheap foreign competition. Under the auspices of the American Sugar Alliance, they’ve even adopted the reasonable-sounding position that the U.S. sugar program can go – so long as other countries ditch their sugar subsidization schemes first. This concept, known as “zero-for-zero,” is in fact an unattainable ideal that all-but-ensures that sugar protectionism will remain a staple of U.S. policy. Claims abound that the U.S. “unilaterally disarming” on sugar policy is only a sweet deal for foreign companies and the governments subsidizing them.

The European Union proved these “zero-for-zero” proponents wrong in 2006 when it implemented a wide-ranging quota relaxation and target price reduction scheme. Sugar prices have fallen in most of the years since reform, save for a turn-of-the-decade hike (more than 10 years ago) experienced by most countries. The going rate per ton is now about half the price than it was prior to reforms. In contrast, the United States has yet to recover from the price hikes of the Great Recession.

It’s up to Biden and Congress to work together and fix this deeply-dysfunctional system of tariffs and price controls. With the right set of reforms, Americans needn’t choose between breaking the bank and breaking their loved ones’ hearts while shopping for Valentine’s Day.

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