| AEI Assault on No-Cost Sugar Policy Falls Flat |
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| The Sugar Beat |
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The American Enterprise Institute (AEI) isn’t shy about touting its belief that the government should have very little involvement in people’s lives.
 So when AEI hosted a Capitol Hill panel discussion on the status of U.S. sugar policy and recommendations for moving forward, it would have been very easy to walk away with the notion that, as AEI states, “deregulation of the sugar program would reduce domestic sugar prices dramatically…”
Except for two things: American Sugar Alliance’s Jack Roney, and of course, the facts.
Roney was a participant in a panel discussion that was both highly biased and numerically stacked against him. But Roney once again proved that a solid historical perspective combined with common sense arguments would always effectively counter simplistic laissez-faire economic theory.
After touting the fact that sugar policy has operated without cost to taxpayers since 2002 and is projected by the USDA to remain no cost through at least 2021, Roney blew a hole in the argument that sugar prices were unusually high in the U.S.
“Americans spend a smaller percent of their incomes to purchase sugar than consumers in any other country in the world,” he said, noting that in nearly all developed countries, sugar prices are quite a bit higher than in the U.S.
“In the EU, which dropped its sugar program several years ago,” said Roney, “sugar prices have spiked and sugar is even being rationed in parts of Germany.” Roney then pointed out a quote from a European sugar industry executive lamenting the fact that the EU had abandoned its domestic industry.
That EU executive noted that the EU had cut production to make room for imports from “preferential sugar suppliers,” who have turned out to be unwilling to supply when world prices are more attractive than those in the EU, and the sources tend to be higher cost suppliers than the EU market. “In other words, the EU cuts its production in order to make room for less reliable and higher cost developing country producers. A wonderful result!”
Roney cautioned that calls to eliminate U.S. sugar policy could do the same here and would leave us dependent on often-unreliable foreign suppliers.
But the highlight of the discussion was during the question and answer period when one of the AEI economists dismissed the 146,000 jobs and $10 billion in economic activity of the domestic sugar industry by saying, “when [sugar policy] barriers are dropped, those jobs would go away but others would replace them.”
You could literally hear the eyes rolling throughout the room as Hill staffers and others—all vexed by the current jobless recovery—tried to imagine tossing tens of thousands of jobs out the window for the promise of new jobs that would theoretically appear.
Roney also scored big when he aptly pointed out the complete lack of correlation between producer prices for sugar and retail prices of products containing sugar. In fact, the correlation was nearly inverse, with drops in sugar prices almost always being compared to increases in prices of confectionaries.
“For the last two decades, when sugar prices were low, consumer prices for candy bars and other items seemed to magically rise, as did prices for retail sugar,” Roney added.
There is no evidence that food manufacturers pass their savings on to consumers when sugar prices plunge, he said.
As for the current state of candy makers, Roney explained to the group that profits for the confectionery industry were very strong and continuing to rise.
“This sounds like a no-cost success story,” said Roney. “We have a policy that doesn’t cost U.S. taxpayers a dime while ensuring a high quality, reasonably priced and safe sugar product for American consumers.”
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