In My Opinion | Carl Hiaasen

Carl Hiaasen: Big Sugar’s subsidy — how sweet it is

 

chiaasen@MiamiHerald.com

Cut by cut, the forced budget reductions known as the sequester are beginning to affect millions of Americans.

Head Start education programs for low-income students are being slashed. So are medical services for 2 million native Americans living on Indian reservations and in Alaska.

The Army is suspending tuition assistance for soldiers hoping to enroll in classes, while scholarship funds have been curtailed for children of troops who were killed in combat.

Cutbacks at U.S. Customs and Border Protection are causing long waits and security concerns at Miami International Airport. And the U.S. Department of Agriculture will furlough 6,200 food inspectors for 11 days this summer, which the agency says will create an $8 billion delay in meat exports.

Still, not everyone who depends on the federal government is suffering in these austere times.

According to the Wall Street Journal, the USDA is on the verge of purchasing 400,000 tons of sugar in a massive bailout of domestic sugar processors. The move would cost taxpayers about $80 million.

It’s the sweetest of deals for the big companies that grow cane and beets. For years the government has guaranteed an artificially high price for American sugar, undercutting foreign competitors and inflating consumer prices for everything from soft drinks to breakfast cereal.

Last year, sugar processors under the price-support program borrowed $862 million from the USDA. The loans were secured with about 2 million tons of sugar that was expected to be harvested.

And the harvest was very good. Too good, apparently. The market got flooded.

Between February 2012 and February 2013, the price of beet sugar fell from 51 cents a pound to about 28.50 cents. Raw cane dropped from 33.57 cents to 20.72 cents.

Consequently, the government’s loans to processors are in danger of default. To avoid that, the USDA would take all the sugar and sell it at a discount rate to producers of ethanol, who’d mix it with the corn from which that fuel is distilled.

The transaction would result in Uncle Sam losing 10 cents on every pound of sugar sold, which adds up to an $80 million hit on 400,000 tons of product.

What a brilliant system.

The major beneficiaries of this bailout would be cane growers in Florida and beet operations in Minnesota, Michigan and North Dakota. Big Sugar has outsized political clout in Washington, as evidenced by the silence of so-called fiscal conservatives.

Heavy campaign contributions are spread among Democrats and Republicans alike. Barack Obama took money from the sugar industry, as did Mitt Romney. Hefty donations went to both of Florida’s senators, Bill Nelson and Marco Rubio.

Every time somebody in Congress tries to kill the sugar subsidy, the measure gets voted down — by some of the same lawmakers who love to rail against public spending on welfare benefits, health care and education.

In Florida, the bitter taste of the sugar subsidy goes back decades. The program helped to make multimillionaires out of people who prolifically polluted the Everglades, and who for years fought all efforts to make them clean up their waste water.

(One of the state’s largest cane producers, U. S. Sugar, said earlier this month that it has no outstanding USDA loans. The government hasn’t provided a list of the sugar companies that would gain from the bailout.)

Those who defend Big Sugar say price supports don’t really cost taxpayers anything — except, of course, when the price of sugar dives.

And, not that Americans need an incentive to buy more Snickers bars or guzzle more Mountain Dew, but subsidies jack up consumer costs by about $3.5 billion annually, according to a study by Iowa State University.

Remember all the feigned outrage on conservative talk radio when the government bailed out the auto industry? At least we taxpayers weren’t forced to buy up all those acres of unsold Hummers.

Incidentally, American car makers don’t have the advantage of being shielded from foreign manufacturers like Toyota or Honda.

If you’re in the sugar business in this country, you can depend on politicians to restrict imports and guarantee a set price for your crop — the antithesis of free-market competition.

It’s not a one-time shot, either. It’s an ongoing gush of entitlement.

While we’re cutting scholarships for the children of dead war heroes.

Read more Carl Hiaasen stories from the Miami Herald

  • In My Opinion

    First, do no harm — to your bank account

    After being sued by the Wall Street Journal, the government finally released its Medicare reimbursement data last week. It included the less-than-stunning revelation that 28 of the 100 doctors who received the largest payments in 2012 were from Florida.

  • In My Opinion

    Carl Hiaasen: The profound urgency of DCF reform

    With much chest-thumping, Gov. Rick Scott last week signed a law clipping auto-tag fees by about $25 per vehicle in Florida. He used the opportunity to blast former Gov. Charlie Crist for raising those fees five years ago.

  • In My Opinion

    How many babies must be buried?

    Most of the dead are babies and toddlers, and they perish in horrible ways — starved, punched, shaken, burned, thrown from cars or simply forgotten. There’s nothing left to protect them except the state of Florida, which fails over and over.

Miami Herald

Join the
Discussion

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

The Miami Herald uses Facebook's commenting system. You need to log in with a Facebook account in order to comment. If you have questions about commenting with your Facebook account, click here.

Have a news tip? You can send it anonymously. Click here to send us your tip - or - consider joining the Public Insight Network and become a source for The Miami Herald and el Nuevo Herald.

Hide Comments

This affects comments on all stories.

Cancel OK

  • Marketplace

Today's Circulars

  • Quick Job Search

Enter Keyword(s) Enter City Select a State Select a Category