Local Commentary

COMMENTARY

October 10

Subsidies to sugar farmers hurt community at large COMMENTARY David N. Taylor

AS THE U.S. economy seemingly lurches toward another recession, employers across the nation are imploring Washington to adopt pro-growth policies that will foster the private investment our communities need to put people back to work.

In Pennsylvania, the unemployment rate stands at about 7.8 percent. The number is probably higher when we include those people who have given up looking for work.

But what is most frustrating are those instances in which the federal government takes actions that kill jobs rather than sustain them. This type of counterproductive government policy is exemplified by the ongoing bailouts for sugar-producing companies at the expense of Pennsylvania’s global leadership in confectionery goods.

Every five years, Congress writes a new farm bill, and every five years, lawmakers give away federal largesse to about 6,000 sugar farmers. These goodies include cartel-like quotas on domestic sugar production, restrictive trade barriers to sugar imports and artificially high government-mandated prices for sugar. The impact on Pennsylvania confectioners and other sugar-using food and beverage companies undermines our competitiveness with foreign firms that can buy open-market sugar at lower, global prices.

If this sounds like a government handout or subsidy, that’s exactly what it is. The results are much higher prices and tighter supplies than would exist in a free market. What’s worse, these hidden taxes not only hurt our state’s manufacturers and confectioners, but also hurt consumers who are compelled to pay higher prices for everyday products such as bread, peanut butter, tomato sauce and even canned or frozen fruits and vegetables. These subsidies for sugar farmers hurt our community because they create major economic incentives for U.S.-based manufacturers to import sugar-containing products or relocate plants and factories outside of the United States in order to avoid these restrictive policies.

Ultimately, the U.S. sugar policy is a hidden but very real tax on food manufacturers, their employees and their customers. If the government is going to increase our taxes, it should be done openly – not like the stealth tax on sugar.

The United States can no longer afford to maintain government giveaways such as the sugar subsidy program. In addition to employing more than 40,000 Pennsylvanians, the sugar-using industry in our state generates more than $1 billion in wages for its workforce, and represents tens of billions of dollars in shipments in and out of Pennsylvania. This is real value for Pennsylvania’s economy.

And, if liberated from the price-fixing scheme benefiting a mere 6,000 out-of-state sugar growers, our state’s manufacturing and sugar-using community would see the U.S. price of sugar fall to the levels that buyers in other countries pay. With input costs down significantly – the world price of sugar is often half the U.S. price – these manufacturers could invest in new facilities, hire more workers and be in a far better positions to compete globally and set themselves on paths to long-term growth.

The Pennsylvania Manufacturers’ Association urges our state’s entire congressional delegation to stand up for this mainstay of Pennsylvania industry and support legislation that would end the price-fixing on sugar. U.S. Rep. Joe Pitts, a Republican representing Lancaster and Chester counties, recently introduced a bipartisan measure, the Free Market Sugar Act, which would comprehensively reform the sugar program and unleash growth opportunities for this industry and manufacturers across the nation.

We applaud Congressman Pitts’ efforts and urge other members of Congress to join him in ending this price-fixing cartel.

The harmful impact of the sugar program is felt everywhere, from the manufacturing floor to the grocery store aisle to the kitchen table. Enough is enough.

David N. Taylor is executive director of the Pennsylvania Manufacturers’ Association, a statewide trade organization representing the manufacturing sector in Pennsylvania’s public policy process. Visit www.pamanufacturers.org.

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