Congressman John Campbell's Blog - Green Eyeshade Blog

Wednesday, May 07, 2008

Posted by: John Campbell at 3:18 PM

Despite a much needed revamp of the entire farm bill, conferees continue to struggle through negotiations, but there is at least one group of planters who will come out ahead. However, despite this congressional gridlock, there is at least one group of planters who continue to make money off the old farm bill. Sugar cane and sugar beet growers have actually managed to increase the size of their proverbial pot in the new package. Why? Because of government sponsored mandates for a “sugar-to-ethanol” program in the United States.

The U.S. Sugar industry has long enjoyed the comfort of a federal security blanket. With interlocking price supports and import quotas, sugar tycoons have been able to sell their product in the marketplace with little or no foreign competition. However, with the implementation of free trade agreements such as the 2005 Dominican Republic-Central America Free Trade Agreement (DR-CAFTA) and new provisions in NAFTA, the sweet deal U.S. growers had was about to be disrupted. Not to be outdone, a strong lobbying effort was launched on behalf of sugar growers in order to help regain their cozy and secure spot in the U.S. market.

If these provisions in the Farm Bill are implemented, the price for U.S. Sugar (which is already above the global price) will increase, with additional mandates to encourage part of the sugar market towards ethanol production. In addition, the U.S. based ethanol industry also benefits from high tariffs limiting ethanol imports, mostly on sugar derived ethanol from Brazil.

This is a sour deal and contrary to proven free market principles. Ethanol tariffs combined with the sugar subsidies keep Americans from accessing ethanol from its most efficient source, which is sugar.

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Seek writes:	Thursday, May, 08, 2008 9:49 AM
The "Sugar Wall"
Sugar is used in practically everything we eat. The high price of sweeteners is probably at least partially responsible for rising food costs in the United States, not to mention the high price of fuel. Why doesn’t anyone make this connection in these discussions? Want to lower food prices and maybe help out with fuel costs as well? Tear down the sugar wall! We should be ramping up Ethanol production is this country as a hedge against the rising costs of oil and the weakness in the US dollar. Even if we only opened up imports explicitly for fuel production it will certainly help.
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Jim writes:	Thursday, May, 08, 2008 10:20 AM
Protectionism
It makes me sick. Since learning about protecting industries in middle school history I never understood how or why it was necessary to coddle some groups. It all goes to whining complaining businesses and their backers. The legislative branch should eradicate 99% of protection over five years and let them sink or swim like the rest of us. No more tax dollars for subsidies.
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davpatt3 writes:	Saturday, May, 10, 2008 1:29 AM
Just Words?
"Ask not what your country can do for you. Rather, ask what you can do for your country." This statement may as well have been spoken on a different planet when you consider the reckless spending of tax dollars by the U.S. government. The idea of subsidies for agriculture is outrageous. The people who make subsidies possible and those that take them are a disgraceful liability to the country. Any additional proposed government programs that create more dependency on tax dollars is totally self serving and poisonous to the health of America. The level of corruption in our government is only known by God. The entire philosophy of becoming a politician seems to be to secure personal wealth and power while continuously finding creative ways to buy the votes of constituents with tax dollars. How much of the U.S. population works directly for government on any level or is dependent in some way for support from tax dollars? How much money is payed out by the government to support U.S. citizens in some way? America is like a dog that is being slowly killed by ticks.
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About John Campbell

John Campbell is a member of the House Financial Services Committee, and has taken a leadership role in addressing the country's top economic issues. Campbell serves as a member of the Joint Economic Committee, and House Committee on the Budget. He has a Bachelor's Degree in Economics from UCLA and a Master's Degree in Taxation from USC.