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Happy Halloween: Candy-Crushing Cronyism

Posted By Rich Tucker On October 30, 2013 @ 10:00 am In Economics,Front Page | Comments Disabled

candy [1]

Newscom

This Halloween, millions of Americans will, as every year, be handing out candy. But this year, the real trick could be finding treats made in the U.S.A. Because of government cronyism aimed at protecting big sugar producers, much of the candy in your child’s bag will come from overseas.

According to the U.S. Department of Agriculture, in 2012, the price of raw sugar was 40 percent higher in the United States than in the rest of the world. And, while an international sugar glut is expected to send prices tumbling everywhere else later this year, U.S. prices will remain about the same. That’s because of a U.S. government program that guarantees sugar processors a minimum price.

That program costs American taxpayers about $1.4 billion each year, while directly benefitting fewer than 5,000 beet and sugar cane farmers. Most of them, like most big farmers [2], are fairly well off to begin with. Meanwhile, the U.S. Commerce Department’s International Trade Administration says that U.S. consumers pay [3] an extra $826,000 for each sugar-production job saved [4].

According to the U.S. International Trade Commission (yes, there is an International Trade Administration and an International Trade Commission), the sugar program imposes [5] a $49 million net cost on the economy. That’s enough to buy 8.8 million five-pound bags of sugar [6]. A study commissioned by the Sweetener Users Association sets the direct price even higher: between $2.9 billion to $3.5 billion per year.

The sugar program costs jobs as well.

The Hershey chocolate company has cut 1,500 jobs [7]. Atkinson Candy Co. now makes 80 percent of its peppermint-flavored products at a factory in Guatemala [8] that opened in 2010.

According to a 2006 U.S. Department of Commerce report [9], the U.S. has lost more than 10,000 candy-making jobs since 1997. The report adds that three candy-making jobs are lost for each sugar-growing and processing job saved by higher domestic sugar prices. “As long as the government has the ability to hand out favors to some industries and punish others, resources will be diverted away from productive private-sector activities to fund lobbying campaigns in Washington, D.C.,” notes Heritage’s Bryan Riley [5]. “This Depression-era program, which was supposed to end in 1940, has outlived its intended lifespan by 72 years. It should be abolished.”

Until it is, the trick’s on American food consumers.

 


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2013/10/30/happy-halloween-candy-crushing-cronyism/

URLs in this post:

[1] Image: http://blog.heritage.org/wp-content/uploads/candy.gif

[2] like most big farmers: http://blog.heritage.org/2013/05/29/the-rich-and-famous-at-the-farm-bill-trough/

[3] U.S. consumers pay: http://blog.heritage.org/2010/12/06/the-cost-of-sugar-subsidies/

[4] $826,000 for each sugar-production job saved: http://www.ita.doc.gov/media/Publications/pdf/sugar06.pdf

[5] the sugar program imposes: http://www.heritage.org/research/reports/2012/04/us-sugar-program-bad-for-consumers-agriculture-and-america

[6] five-pound bags of sugar: http://shop.dominosugar.com/Granulated-Sugar/Sugar-5-lb-bag

[7] has cut 1,500 jobs: http://www.wthr.com/story/6093096/hershey-to-slash-1500-jobs-over-3-years?clienttype=printable

[8] a factory in Guatemala: http://finance.yahoo.com/news/cheaper-sugar-sends-candy-makers-030000451.html

[9] 2006 U.S. Department of Commerce report: http://abcnews.go.com/Business/IndustryInfo/story?id=6867472

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