The Sugar Line

The problem

The United States runs a sugar programme that most Americans have never heard of and every American pays for. It works in three parts: a tariff-rate quota that limits how much foreign sugar may enter at a low duty, marketing allotments that limit how much domestic sugar may be sold, and a loan programme that guarantees growers a floor price. The result is a price for refined sugar in the United States of about 51.5 cents a pound in 2022 against a world price of 24.9 cents: American buyers pay roughly double. The Government Accountability Office estimated in 2024 that the programme costs consumers between $2.5 and $3.5 billion a year, and costs the economy as a whole about $1 billion a year net, after counting what growers gain.

Who gains is a short list. The 2022 Census of Agriculture counted 4,002 farms growing sugar beets or sugar cane, down from 8,136 in 1997; the industry's own figure, counting every family with a stake in a cooperative, is about 11,000. A programme costing $3 billion a year for 4,000 farms is a transfer of roughly $750,000 per farm per year, paid in the price of every soft drink, cereal box and birthday cake, by everyone, most of whom have never seen a cane field.

Who loses is a longer list. The Commerce Department found in 2006 that for every job the sugar programme protects in growing and refining, about three are lost in the industries that use sugar, because a candy maker that pays double for its main ingredient moves to Canada or Mexico, where it does not. The programme is defended as costing taxpayers nothing, which is true in the narrow sense that the cost appears on no budget line. It appears on the receipt.

This catalog's rule for a transfer is that it should be visible, universal, or both. The sugar programme is neither. It is the model of the thing the catalog exists to replace: a hidden tax, collected from everyone, delivered to a few, defended by the few with the money it delivers.

The proposal

The Sugar Line: the sugar quota, the marketing allotments and the price-floor loans are wound down over five years and repealed. Every current grower receives a one-time buyout, as tobacco growers did in 2004, equal to three years of the programme's estimated benefit to their farm, paid from an appropriation and published by recipient. The country pays once, in public, what it now pays every year in private. No new commodity may be granted a quota or allotment without a law that states its cost to consumers in its text.

How it would work

1. Five years down. The tariff-rate quota rises by a fifth of the gap to free entry each year, the marketing allotments loosen on the same schedule, and the loan floor falls to zero in the fifth year. The domestic price converges on the world price over five years rather than in one, so that growers, refiners and the towns around them have time to adjust.

1. The buyout. The 2004 tobacco buyout paid quota holders and growers about $10 billion over ten years to end a Depression-era quota system, and the tobacco regions did not collapse. Sugar growers receive the equivalent: a payment equal to three years of the programme's benefit to their operation, calculated from the Agriculture Department's own data on acreage and allotment, paid over the five years of the wind-down. Roughly $3 billion a year in consumer cost, times three, is about $9 billion once, against $3 billion a year forever.

1. Published by name. Every buyout payment is public, by recipient, as farm subsidies already are through the Environmental Working Group's database and should be through the government's own. A payment made in public is a payment that can be defended or not.

1. The line. No commodity may in future be granted an import quota, a marketing allotment, or a price floor unless the law creating it states, in its text, the Agriculture Department's estimate of the annual cost to consumers. Congress may still do it. It may not do it quietly.

1. Anti-dumping stays. The ordinary trade remedies against subsidised or dumped sugar remain available on the ordinary evidence, as for any product. What ends is the standing wall, not the law against being cheated.

1. What the savings are not. The proposal does not claim the consumer savings for the fund, because they are not collected by anyone; they stay in the grocery bill. If the country decides it wants sugar to be expensive for the sake of health, № 150 is the place for that argument, and the answer there is a tax whose proceeds go to the public, not a quota whose proceeds go to 4,000 farms.

The numbers

The cost. $2.5 to $3.5 billion a year to consumers, by GAO; about $1 billion a year in net economic loss after growers' gains.

The buyout. About $9 billion, once, over five years. Paid for by year four of the savings, and every year after that is clear.

The jobs. Sugar growing and refining employ on the order of tens of thousands; sugar-using manufacturing employs about 600,000. The 2006 Commerce study's ratio of three jobs lost per job protected is old, and the honest statement is that nobody has updated it because the programme's defenders would rather not.

The price. Halving the sugar price saves the average household a small sum directly, on the order of $25 a year, and more indirectly through everything that contains sugar. It is not a large sum per household. It is a large sum in total, paid to a very few, which is exactly the shape of transfer this catalog exists to end.

The honest objections

"Foreign sugar is subsidised and dumped, and free entry hands the market to Brazil." Brazil is the world's lowest-cost producer and would take a large share of the American market at world prices, which is what the world price means. Item 5 keeps the ordinary remedies against dumping below cost. What the programme protects against is not cheating but competition, and a country that will not buy cheap sugar because someone else grows it cheaply has adopted a principle it applies to nothing else it buys.

"Cheap sugar is bad for public health." Possibly, and if so the answer is a tax on sugar whose revenue goes to the public, argued in the open, not a quota whose revenue goes to growers. The current programme is a sugar tax of about $3 billion a year whose entire proceeds are paid to 4,000 farms. Nobody who worries about diabetes should defend that design.

"This destroys farming communities in Florida, Louisiana and the Red River Valley." The buyout is the answer and the tobacco precedent is the evidence: the 2004 buyout ended a quota system older than the sugar programme and paid the growers to adjust, and North Carolina's tobacco counties are still there. Three years of benefit, paid in cash, to every grower, is a larger transition payment than most industries have ever received.

"$9 billion is a lot to pay people to stop being subsidised." It is, and it is three years of what the country pays now with no end date. The alternative, to repeal the programme without a buyout, has been proposed for forty years and has failed every time, because the growers' losses are concentrated and the public's gains are diffuse. The buyout makes the growers indifferent and the public better off. That is the deal, and it is a good one.

"The programme costs taxpayers nothing." It costs consumers $3 billion a year and the Treasury nothing, which is the most expensive kind of programme there is: the kind that never appears in a budget and therefore never has to be defended. Item 4 exists so that no future one is built the same way.

Sources

• U.S. Government Accountability Office, Sugar Program: Alternative Methods for Implementing Import Restrictions Could Increase Effectiveness (GAO-24-106144), 2024, consumer and net economic cost estimates
• U.S. Department of Agriculture, Economic Research Service, Sugar and Sweeteners Background, U.S. and world refined sugar prices
• U.S. Department of Agriculture, 2022 Census of Agriculture, sugar beet and sugar cane farm counts; 1997 Census for comparison
• U.S. Department of Commerce, International Trade Administration, Employment Changes in U.S. Food Manufacturing: The Impact of Sugar Prices, 2006
• Fair and Equitable Tobacco Reform Act of 2004, Title VI of Pub. L. 108-357, on the tobacco quota buyout
• Proposals № 036 (The Rural Compact); № 038 (The Carbon Dividend); № 080 (The Farm Floor, forthcoming); № 150 (The Life Ledger, forthcoming)