Despite the efforts of a coalition of free-market supporters to persuade Senators to pass an amendment to the farm bill to reduce sugar subsidies, the Senate voted it down on Wednesday, 54-45. The coalition, including the Club for Growth, Americans for Prosperity, the Competitive Enterprise Institute, and Americans for Tax Reform, stated in a letter to senators that the present sugar subsidy program is nothing more than a cartel directed by the Department of Agriculture:
Under this program, the federal government makes all the decisions about supply and demand and pricing. It looks into its crystal ball and tells producers how much they can grow to meet users’ needs; it decides how much and when imports of sugar are needed; it determines the price that domestic sugar is sold.
And, when supply and demand are out of alignment, the sugar-for-ethanol program kicks in.
Because the free market isn't allowed to make these determinations, unelected bureaucrats, often influenced more by lobbyists than free-market principles, allocate quotas to the 5,000 sugar beet farms and 950 sugar cane farms in the United States. By limiting supply, the price of sugar predictably has historically been twice to three times higher in the United States than in the world markets. This costs the consumer in two ways: “Americans are hit with higher prices on a vast array of foodstuffs while at the same time shouldering the cost of a massive regulatory bureaucracy.”
Andrew Roth, writing for the Club for Growth, said:
The federal sugar program is a prime example of the federal government wrongly picking winners and losers in the private sector. It dislocates jobs, increases prices for consumers and businesses, and includes a protectionist quota that stifles freer trade.
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