US sugar policy is found to be deficient in the GAO study.
WASHINGTON In a 65-page report published on October 31, the Government Accounting Office (GAO) stated that although the US sugar program, which is run by the US Department of Agriculture, creates net costs to the economy due to higher consumer prices for sugar, it offers significant benefits to growers of sugar cane and beets because it guarantees relatively high prices for domestic sugar.
The Sweetener Users Association (SUA), which represents US food and beverage businesses, viewed the study as proof that US sugar policy needs to be updated, while the American Sugar Alliance (ASA), which represents US sugar producers, swiftly refuted the GAO’s assertions.
According to the GAO analysis, US sugar producers get huge benefits, with sugar cane and beet farms generating much higher profits per acre than other US farms. The paper states that the sugar program increases domestic sugar output and helps sugar cane and beet producers to the tune of $1.4 billion to $2.7 billion.
According to the GAO, the US sugar program results in net costs to the economy as consumers bear a greater burden from higher sugar prices than producers do. Studies suggest that the program costs customers between $2.5 and $3.5 billion annually, with an annual net cost to the economy of roughly $1 billion. According to other research, the program causes employment in US companies that primarily depend on sugar, such the confectionery industry, to drop. According to the analysis, US consumers—including food manufacturers—paid double the global price for sugar in 2022.
Rob Johansson, the ASA’s head of economics and policy analysis, stated that “GAO continues to make major and obvious errors in their analysis of sugar policy and markets in the United States and in other countries, to the detriment of American farm families and workers.” “We implore Congress to take into account the facts, which plainly show that massively subsidized imported sugar has skewed the world sugar market over the past 20 years, since worldwide sugar production costs have frequently surpassed global sugar prices. Rather than depending on the faulty analysis of the GAO, which ignores common sense and is biased against any policy that benefits US farm and ranch families, regardless of the commodity.
“It is regrettable that the GAO report fails to acknowledge the significant economic benefits that domestic sugar production provides to nearby communities, such as 151,000 jobs and $23 billion in revenue, and the significant harm that foreign subsidies cause to these communities—which severely distort the global market and negatively impact US farm families. GAO keeps using outdated research and figures that have been shown to be false. The results of more recent economic research unequivocally show that American consumers do not benefit from any cost savings on sugar that large, multinational companies that purchase and utilize in their goods receive. Rather, they increase the users’ already impressive earnings.
“We appreciate the GAO taking a hard look at the US sugar program and confirming that it is, in fact, a harm to US consumers, sugar-using companies, and the overall economy,” stated Rick Pasco, president of the SUA. We urge Congress to implement beneficial changes in the agricultural bill as the argument for updating US sugar policy to better benefit all sugar stakeholders grows.
According to the GAO, the US is one of the biggest manufacturers and users of sugar worldwide. The USDA claims that the Agriculture and Food Act of 1981 created the present framework for the US sugar program and included provisions to sustain the price of sugar produced in the United States. The program is up for reauthorization; the most recent reauthorization occurred in 2018.
According to research, Mexico accounts for about half of US sugar imports, and this has a big impact on the US market, the study stated. Mexican sugar imports were no longer subject to tariffs or quotas as of 2008. Mexico and the US decided to impose quantity and minimum price restrictions on Mexican imports in 2014. Mexican sugar imports decreased as a result, and prices increased, helping US sugar farmers at the expense of consumers and the whole economy.
You may also like:
Food security in emerging nations: issues and remedies
Are drinks the secret to increasing cannabis use among consumers?
Managing the lack of labour for mushroom picking
Trade obligations set through free trade agreements and the World Trade Organization (WTO) affect over half of the remaining US sugar imports. The USDA provides advice to the US Trade Representative (USTR), who uses a 40-year-old formula to distribute WTO tariff rate quotas among sugar-importing nations.
The GAO stated, “In actuality, this has resulted in fewer sugar imports than anticipated and delays in obtaining sugar.” “USDA and USTR have not given their allocation system any thought. USDA and USTR may be passing up chances to improve the effectiveness and efficiency of sugar allocations if they don’t take innovative approaches into account.
The GAO’s findings led to the following recommendations: that the USDA assess alternative methods for allocating raw sugar tariff-rate quotas in order to determine which would best maintain a sufficient supply while minimizing government costs; that the USTR assess alternative methods for reallocation and allocation in order to ensure that they are consistent with US law and international obligations; and that the USTR utilize the findings of those assessments to validate
The US sugar program’s impacts were to be reviewed by the GAO. The GAO conducted interviews with government officials, academics, and industry stakeholders, including organizations that represent the sugar producing and sugar-consuming sectors, in addition to reviewing agency records and data. A review of the literature on the impact of the US sugar program on commerce and the economy was also done by the GAO.