Lawmakers can Spread the Love by Ditching Sugar Program

It’s Valentine’s Day, and lovers are lining up to buy sweet treats for that special someone in their lives. However, inflation has left a sour taste in consumers’ mouths. Candy prices are increasing 10 percent per year, leading to shrinking product sizes and sellers ditching treats like chocolate altogether.

Unfortunately, government policies are largely to blame for blunting Cupid’s arrow. The New Deal-era U.S. Sugar Program has long overstayed its welcome, making it all-but-impossible for inexpensive sugar imports to make their way onto American shores. Because of these Stalin-style price controls, consumers spend up to $4 billion more than they should on confectionary treats. Policymakers should spread the love this Valentine’s Day by finally ditching the Sugar Program and getting a lid on inflation.

Since the Roosevelt era, America’s not-so-sweet sugar policy has inflicted significant costs on consumers, taxpayers, confectioners, and food producers. The infamous 1934 Sugar Act laid the groundwork for a sprawling import, allotment, and quota scheme that froze markets and calcified high sugar prices. America’s disastrous flirtation with price controls has cost consumers dearly.

According to a 2023 report by the Government Accountability Office (GAO), the “U.S. sugar program creates net costs to the economy, because higher sugar prices created by the program cost consumers more than producers benefit.” The watchdog notes that program’s costs extend beyond just higher prices for consumers. According to the GAO, “the number of employees in sugar and confectionary product manufacturing declined by 18% from 1990 to 2022, while the number of employees in other food manufacturing increased by 15% during this period…studies estimate that the program leads to declines in U.S. employments in industries that rely heavily on sugar.”

These byzantine price controls force Americans to cut back on their purchases. This comes to the detriment of thousands of small businesses across the country. The Baltimore-based Wockenfuss Candies owner and president Paul Wockenfuss expressed concerns that strict import restrictions create an “unlevel playing field” that is “just hurting the smaller businesses.” When businesses can’t sell their products due to dubious government programs, jobs are inevitably lost. According to a 2013 Iowa State University study, the U.S. sugar program costs up to 20,000 jobs per year even considering employment in the “protected” domestic sugar industry.

Yet, advocates for the broken status-quo warn of the dire consequences of the U.S. opening its markets to cheap foreign competition. They’ve even adopted the reasonable-sounding position that the U.S. sugar program can go – so long as other countries ditch their sugar subsidization schemes first. This concept, known as “zero-for-zero,” is in fact an unattainable ideal that all-but-ensures that sugar protectionism will remain a staple of U.S. policy. Claims abound that the U.S. “unilaterally disarming” on sugar policy is only a sweet deal for foreign companies and the governments subsidizing them.

The European Union proved these “zero-for-zero” proponents wrong in 2006 when it implemented a wide-ranging quota relaxation and target price reduction scheme. Sugar prices have fallen considerably since reform. Despite recent price increases, prices are still significantly lower than they were pre-reform. Due to further farming-related liberalizations, European production relative to consumption is growing and will likely continue to grow.

Europe ended its longstanding lover’s quarrel with consumers. There’s no reason why the U.S. cannot do the same. By ending the Sugar Program and tampering inflation by reducing spending, policymakers can spread the love and ensure a sweet Valentine’s Day.