Search results: sugar policy

The House version of the farm bill is in a mess right now and there is much to say about both its process (highly politicized) and content (thoughtless, mean-spirited, and just plain nasty).  I will be singling out specific pieces for comment every now and then.

Let’s start with a proposed amendment that the House soundly defeated.  AP reporter Candace Choi succinctly summarized the significance of this defeat: Big Sugar beats back Big Candy.

I’ve discussed our absurd Big Sugar policy in previous posts.

For decades, despite endless reform attempts, U.S. sugar policy has protected the interests of producers of sugar cane and sugar beets.

Basically, current policy maintains the price of domestic sugar at a level higher than the market price in order to protect politically powerful sugar cane growers in Louisiana and Florida, and somewhat less powerful—but far more numerous—growers of sugar beets.

American consumers pay more for sugar, but only an average of $10 per capita per year, not enough to get people upset.

The big losers are candy makers and other commercial users of cane and beet sugars.  Soft drink makers are relatively unaffected because they mostly use high fructose corn sweeteners.

Reps. Virginia Foxx (R-N.C.) and Danny K. Davis (D-Ill.) sponsored an amendment to the farm bill that would require the sugar industry to repay the government if and when its loan program operates at a loss.

The sugar program is not supposed to cost taxpayers any money because it keeps prices high enough so that loans get paid back.  But in 2013, prices fell and the USDA had to buy surplus sugar at a loss of $259 million. The Congressional Budget Office says that the sugar program will cost about taxpayers about $76 million over the next decade.

Nevertheless the House defeated the sugar amendment by a vote of 137 to 278.  How come?  Louisiana and Florida are key election states.  Sugar beet growers operate in practically every northern state in the U.S.

The successful fight to defeat the amendment was led by the American Sugar Alliance.  The Washington Post reports how the Alliance paid for an advertising campaign positioning the growers it represents as victims.

A full-page ad in last Wednesday’s Wall Street Journal featured a picture of two Louisiana sugar planters and the words: “Excluding us from loans available to other crops isn’t ‘modest reform,’ it’s discriminatory. Don’t cut sugar farmers out of the Farm Bill. Oppose harmful amendments.”

And so the House did.

This is only the latest episode in attempts to reform sugar policy.  Chalk this one up as a win for Big Sugar, as Candace Choi so nicely pointed out.

I can’t believe that I am writing about sugar policy again.  The Trump Administration has just gotten a preliminary agreement with Mexico about the sugar it exports to us.

Mexico says OK, (1) it won’t make us pay as much for it, and (2) it will restrict how much refined (white) sugar it sends.

This is great for U.S. sugar processors who turn raw sugar into white.  They want Mexico to send raw sugar so U.S. processing plants stay busy.

But food and beverage companies making products will have to pay more for sugar.  They belong to the Coalition for Sugar Reform, which is not happy about the agreement.

Under NAFTA, Mexico could sell unlimited amounts of sugar to us.   But our domestic sugar producers complained the Mexicans were “dumping” subsidized sugar and undercutting their prices.  In retaliation,

• We threatened to impose tariffs.
• Mexico threatened to stop buying our high-fructose corn syrup (it currently buys 80% of our HFCS).

Three years ago, we got Mexico to agree to set minimum prices and limit the amount of sugar it sells to us.  The new arrangement confirms that deal, at least for the moment.

As for us public health types, sugar policy is endlessly weird.  Domestically, we don’t produce enough sugar to meet demands so we have to import sugar from other countries.  We keep domestic prices high through quotas, buy-backs and price-support loans.  This ought to discourage consumption, but does not.

How come?  Because the higher price, amounting to billions a year overall, works out to only about $10 per year per capita.

This is not high enough to:

• Reduce sugar consumption
• Improve health
• Generate outrage

Want to read more about this?

• The  US International Trade Commission did a report in 2011 stating that a liberalized sugar trade policy would increase food sales.
• The American Enterprise Institute says higher sugar prices cost Americans almost $3 billion a year.
• Reuters: Coke, Cargill enter fray as sugar dispute threatens Mexico trade 
• Nasdaq: U.S., Mexico closer to sugar trade deal: Mexican economy minister 
• Mexican News Daily:  US sugar industry accused of lying

I”m feeling wonky this morning and can’t resist commenting on Senator Ted Cruz’s remarks about the US sugar program.

According to BuzzFeed,

while railing against “corporate welfare,” Cruz singled out subsidies for the sugar industry — a policy Rubio has consistently, and controversially, supported despite objections by free-market critics.

“Sugar farmers farm under roughly 0.2% of the farmland in America, and yet they give 40% of the lobbying money,” Cruz said in the debate. “That sort of corporate welfare is why we’re bankrupting our kids, and grandkids.”

Chase Purdy of Politico quoted Cruz as saying “I would end those subsidies to pay for defending this nation.”

Only that’s not how the sugar program works. Subsidies for U.S. sugar producers are provided by consumers, through artificially high prices, rather than by the government. Rather than direct subsidies, the sugar program involves limiting import and supporting prices, leading to U.S. sugar prices that are higher than sugar on the global market.

Politico also investigated “40% of the lobbying money.”

Forty percent of what? It’s not clear. But it’s hard to imagine any way to get there. Total spending on lobbying was $3.24 billion last year, according to data compiled by the Center for Responsive Politics. Agribusiness spent $127.5 million, or about 4 percent. The sugar cane and sugar beets industry? $9.6 million, or 0.3 percent.

I love writing about our arcane sugar policies, which do indeed involve quotas and tariffs, but not subsidies.  The USDA explains sugar policies on its website.  The important ones:

• Domestic Price Support
• Flexible Marketing Allotments
• Disposition of Sugar Owned by the CCC
• Sugar Tariff-Rate Quotas and Other Trade Measures

Sugarcane growers have their own explanation of how the system protects them.

And because politics makes strange bedfellows, the Heritage Foundation’s explains how US sugar policies gouge US consumers, costing us more money than sugar consumers anywhere else.

From a public health standpoint, higher prices for cane and beet sugar aren’t all that bad if they encourage people to consume less.

But on a per person basis, the increased cost isn’t all that much: on the order of $10 per capita per year.

This explains the lack of public opposition to the policies.  They are hard to notice at the grocery store.

It also explains why  food companies prefer using high fructose corn syrup.  It’s cheaper.  Corn production, after all, does get subsidies for crop insurance.  But then, we use corn to make ethanol.

Aren’t ag policies fun?  No wonder candidates don’t understand them.

While we are on the topic of sugars (see previous post) I saw this ad on the Hagstrom Report.  I wondered what it was about.

I went to the American Sugar Alliance website to look.

Legislation introduced by Congressman Ted Yoho (R-FL) to end global sugar subsidies in favor of a free market has picked up key endorsements in recent weeks, including many conservative organizations and numerous lawmakers.

Yoho’s bill would instruct the administration to target the foreign sugar subsidies that are distorting world prices. Once foreign subsidies are eradicated, U.S. sugar policy would be eliminated.

If I understand this correctly, Congressman Yoho is offering a trade:  If foreign governments of sugar-producing countries will stop subsidizing their countries’ sugar producers, we will stop charging tariffs on the sugar we import from them and we will end our quota system for sugar beets, both of which keep U.S. sugar prices considerably higher than world market prices.

For decades, U.S. Presidents have pledged to fix sugar policies (see my post explaining how they work), but they always get stopped by the well organized interests of the U.S. sugar industry—the producers of cane and beet sugar.

Current policies result in higher sugar prices for consumers but since the higher costs average out to only about $10 per person per year, nobody gets too upset about them.

European sugar quotas are supposed to end this year.  Whether they will is uncertain.

But wait!  Maybe higher sugar prices are a Good Thing.  Higher prices generally discourage consumption.

Clearly, these higher prices are not high enough.  This graph shows trends in the availability (not really consumption) of sugars in the food supply per capita, in pounds per year.

The good news: Total sugars have been declining in the food supply since about 2000 and now “only” amount to about 100 pounds per person per year.

Most of the drop is in the availability of cane and beet sugars (sucrose), now down to just over 40 pounds per capita.

The not-so-good news:  Sucrose (glucose and fructose) is being replaced by corn syrup (glucose) and high fructose corn syrup (glucose and fructose).

The bottom line: just about everyone would be healthier consuming less of any kind of sugar.

My Sunday (September 20) column in the San Francisco Chronicle deals with the sugar “crisis” I discussed here a few weeks ago:

Q: I saw you on “The Colbert Report” (Aug. 19) talking about sugar policy. Explain, please. I don’t understand why sugar policy is a topic for Comedy Central.

A: Neither did I until I saw Stephen Colbert douse himself with 5 pounds of sugar over the impending “crisis.” We have a sugar crisis? According to processed food manufacturers, we are about to run out of sugar. Horrors!

Earlier in August, Kraft and other food processors asked the U.S. Department of Agriculture to raise the quota on sugar imports. Sugar availability, they complained, is the lowest in years and it’s the USDA’s fault.

The USDA firmly controls amounts of sugar (sucrose) produced by American cane and beet growers through quotas. It even more firmly controls sugar imported from other sugar-growing countries through quotas and tariffs. And as corn is increasingly diverted to biofuels, less high-fructose corn syrup (HFCS) is around to make up the shortfall.

Should we worry?

The shortage is no crisis. At worst, it is temporary and will end as soon as the 2009 harvest is in. But processed food makers are right about one thing: Sugar is the most absurdly protected agricultural commodity in America.

For decades, no matter what it cost on the world market, quotas and tariffs ensured that Americans paid two or three times as much for sugar. High sugar prices cost American consumers about $3 billion a year. But because this works out “only” to about $10 per year per capita, nobody much cared.

If you think of $10 as trivial, you won’t give sugar protectionism another thought. But if you look at this system as an unnecessary transfer of $3 billion a year from 350 million Americans to a few thousand sugar growers and processors, you can understand why sugar policy is ripe for satire.

Here’s how the system works:

Quotas allow U.S. producers to grow only specified amounts of sugar cane and sugar beets each year, for which the USDA guarantees a higher-than-market price. Beets get 55 percent of the quota; cane gets 45 percent. The quotas are fixed. If you want to grow sugar beets in your backyard and sell the sugar to USDA at the favorable support price, too bad for you. You only get a quota if you already have a quota.

As for tariffs, the 2008 Farm Bill requires 85 percent of total sugar in the United States to be produced domestically, and allows only 15 percent to be imported. That 15 percent is distributed through quotas awarded to about 20 countries.

Above and beyond the quotas, imported sugar is subject to high tariffs. Mexico is an exception. Under NAFTA, Mexico gets to sell us as much sugar as it wants at the favored price. However, few countries in Africa hold quotas. What if you are an African cane-growing country and want the high quota price for your sugar? Not a chance.

Imports are never supposed to top 15 percent, so the USDA can’t increase the percentage. But we participate in the World Trade Organization, which obligates us to take world market sugar. Oops. These policies don’t match. Processed food makers must think the contradictions will allow the USDA to let in more sugar. Maybe, but the legalities are not yet decided.

Mind you, sugar producers and processors love this system. They argue that it keeps jobs in rural America and eliminates dependence on foreign sugar imports. To make sure nobody scrutinizes the system too carefully, they formed cooperatives to avoid antitrust laws.

Sugar producers are among the most generous and equal-opportunity contributors to congressional election campaigns, giving to both Democrats and Republicans. For decades, administrations of both parties have tried to end sugar supports. No such luck.

A shift’s brewing

Policies may change, because the gap between the prices for domestic and world market sugar – and for high fructose corn syrup – has narrowed recently. Sugar is now at war with HFCS. As HFCS is increasingly known as a key junk food ingredient, manufacturers are rushing to replace it with sucrose, which they can tout as “natural and unprocessed.”

Other sugar issues are also ripe for comedy. Most sugar beets are now genetically modified, leading many companies to avoid using beet sugar. In the South, sugar cane production pollutes the Everglades, which is costing billions of dollars to clean up. Investigative reporters are riveted by the feudalistic labor practices of sugar plantations.

And then there’s Cuba. Until the Castro revolution, that’s where we got most of our imported sugar. When relations improve, will Cuba get a sugar quota?

If sugar is responsible for any true crisis, it is because of its role as an ingredient in processed foods. Cheap sugar reduces the cost of candy and soft drinks. Cheap junk foods are highly profitable. Otherwise, our sugar policies make no sense in today’s global marketplace.

But we would be healthier eating less sugar, anyway. So here’s my solution to the non-crisis: Eat less sugar!

The UN’s World Health Organization (WHO) has long led efforts to tax unhealthy products, starting with tobacco.

WHO describes its health tax efforts here.

It recently issued Global report on the use of sugar-sweetened beverage taxes, 2023.

The report finds that 108 countries have some kind of tax on sugar-sweetened beverages.

But, it finds

Less than a quarter of countries surveyed account for sugar content when they impose taxes on these non-alcoholic beverage products. Countries with a sufficiently strong tax administrative capacity are encouraged to tax beverages based on sugar content, as it can encourage consumers to substitute with alternatives that have lower sugar content as well as incentivize the industry to reformulate beverages to contain less sugar.

One of its major overall findings:

Among its conclusions are these:

• Existing taxes on SSBs could be further leveraged to decrease affordability and thereby reduce consumption. While other perspectives and competing factors have to be accounted for when designing taxation policies, the protection of health should be a key consideration, particularly considering the health and economic burden associated with obesity and diet-related NCDs.
• This report concludes that excise taxes on SSBs are not currently being used to their fullest potential. Improving tax policy and increasing taxes so that SSBs become less affordable should be pursued more systematically by countries in order to effectively reduce consumption and prevent and control diet-related NCDs, including obesity and dental caries.

Here’s the evidence.  Get to work!

Resoures

• More about WHO’s work on health taxes
• Global report on the use of alcohol taxes, 2023
• WHO technical manual on alcohol tax policy and administration
• Health taxes database

UNICEF does not want its statements to be compromised by conflicted interests with food and beverage companies that make formula or foods for children.

Here’s how UNICEF will be dealing with the food and beverage interests.

This publication explains just how UNICEF intends to avoid conflicts of interest with companies making products that do not promote childrens’ health.

The practices and products of a subset of the F&B industry whose primary business is the production, distribution, marketing and retailing of ultra-processed foods and beverages (UPF) pose particular concern. The companies producing these unhealthy, nutrient-poor UPF – rich in sugar, salt, trans-fats and food additives and preservatives – are major drivers of today’s broken food system and the global epidemic of childhood overweight and obesity and diet-related non-communicable diseases…It is now widely accepted that the practices and products of the UPF industry harm children’s and adolescents’ lives and have become the main commercial determinant of childhood malnutrition and disease.

Evidence shows that direct partnering with the UPF industry (i.e., working with) and voluntary UPF industry initiatives do not translate into large-scale sustainable results in transforming food systems for children. Further, direct funding engagements with UPF industry stakeholders pose a significant reputational risk to the credibility of UNICEF programming and independence as governments’ trusted advisor for policy formulation, normative guidance and programme scale-up for children and adolescents.

UNICEF says it will, among other measures (my emphasis):

• Continue to advocate for the F&B industry not to be included in public policy making.
• Continue avoiding all partnerships with F&B industries that violate the Code.
• Avoid all partnerships with ultra-processed food and beverage (UPF) industries.
• Exclude Code violators and UPF industries in UNICEF-led business platforms.
• Engage responsibly with the F&B industry in humanitarian response.

These commitments are a major public health advance.  Let’s hope UNICEF sticks with them.

I was sent a note from the University of California Research Consortium on Beverages and Health about its new fact sheets on sugar-sweetened beverages done in collaboration with the American Heart Association.  The Consortium includes faculty who work on some aspect of sugar science on all ten UC campuses.

Factsheets and Infographics on the UC Research Consortium on Beverages and Health webpage:

• Factsheet: What Are Sugary Drinks?
• Factsheet: 7 Reasons to Skip Sugary Drinks.
• Factsheet: Health Harms of Sugary Drinks.
• Factsheet: The Heavy Environmental Impact of Sugary Drinks.
• Factsheet: Sugary Drinks and COVID.
• Factsheet: How Four Cities in California Are Using Sugary Drink Tax Revenues. UC Research Consortium on Beverages and Health.

They also can be accessed from UC’s Nutrition Policy Institute publications page.

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