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An Open Letter to the U.S. Congress: The Time to End the Sugar Program is Now

March 11, 2005

Dear Member of Congress:

On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write to offer our views concerning the current status of the federal sugar program.

On Tuesday, March 15th, two Members of the Congressional Sugar Reform Caucus will speak at a 2:00 p.m. news conference in room 2360 of the Rayburn House Office Building to outline their perspectives on why current U.S. sugar policy needs reform. At this event, the Sugar Reform Working Group ? consisting of nonprofit groups from across the political spectrum, including NTU ? will release an ?Open Letter to the President and Congress? signed by prominent economists and nonprofit representatives who are concerned about the harm inflicted by current sugar policy. We encourage you and members of your staff to attend the news conference and learn more about the sugar issue.

NTU?s stake in this issue revolves around the price consumers and taxpayers are being forced to pay ? literally ? to prop up inefficient sugar producers. In addition, the sugar program continues to be an obstacle to freer trade and ultimately economic and societal well-being.

It is well known that through a combination of quotas and tariffs, loan programs, and marketing allotments, the federal government enables inefficient sugar producers to survive, by artificially inflating the price of sugar. As a result, consumers pay an extra $2 billion-plus annually because domestic producers are effectively shielded from foreign competition. This federally sanctioned protectionism is a de facto tax on sugar consumers and sugar utilizing industries.

But the hit to taxpayers does not end there. Sugar interests like to make the claim that the federal sugar program is run ?at no cost to the taxpayer.? However, they are ignoring the cost of paying thousands of bureaucrats to run this monstrosity, not to mention outlays for its facilities, equipment, and other expensive needs. The sugar lobby also overlooks the cost to taxpayers for storing surplus sugar in government warehouses ? an estimated $1 million a month ? and fails to tally the countless hours (i.e., tax dollars) trade negotiators spend tweaking bilateral and multilateral trade agreements in order to satisfy the whims of the sugar industry.

Thanks to intensive lobbying by ?Big Sugar,? the recent free trade agreement struck with Australia contained a carve-out for sugar producers: to the detriment of other American industries, the U.S. had to cough up concessions to Australia in return. And now, the Central America Free Trade Agreement is in danger of collapsing because ?Big Sugar? is enraged over the fact that the agreement would provide increased sugar market access for participating countries equal to approximately 1.2 percent of current U.S. sugar consumption, or about one and one-half teaspoons per week, per American.

Sugar producers have been utilizing their massive political influence in Washington to exploit taxpayers and consumers for decades. The U.S. International Trade Commission estimated in 2002 that abolishing the sugar program would result in a net economic welfare gain to the U.S. of more than $1 billion. Statistics such as these only bolster the fact that now is the time for the U.S. Congress to muster the courage to say enough is enough and do away with the federal sugar program.


Tad DeHaven
Economic Policy Analyst