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Candy-Coated Cartel: Time to Kill the U.S. Sugar Program

April 10, 2018
By Colin Grabow

This paper examines the U.S. sugar cartel and how it came to be, providing an overview of the sugar program’s history and its essential elements.

For decades, the federal government has been operating a program to control the production and importation of sugar. One of the program’s main purposes is to ensure minimum price levels for sugar that are typically significantly higher than those found on international markets, leading to higher costs for U.S. consumers. As a result, the federal government is, in essence, the leader of a nationwide sugar cartel.

This paper examines how this situation came to be, providing an overview of the sugar program’s history and its essential elements. As will be shown, the program’s overriding goals are the provision of a minimum income to sugar producers and a higher price for the product than would otherwise be the case through the use of various measures that restrict supply. This clear gain to producers, however, comes at a notable economic cost both to U.S. consumers and to businesses that use sugar as an ingredient in their products. U.S. sugar policy also justifiably furthers suspicions among the citizenry that the federal government is more concerned with advancing the narrow interests of well-connected groups such as sugar producers than promoting the country’s general welfare.

The paper concludes by scrutinizing the rationalizations typically offered for the sugar program’s existence, which are largely found wanting. Claims that the program’s demise would result in catastrophic consequences for the industry are similarly found to be overstated at best. Recently introduced legislation, meanwhile, would likely curb some of the program’s worst excesses. Although it falls short of ideal by failing to abolish the program wholesale, this legislation is perhaps the best option for reform in recent memory

Article Tags
Regulation