Mr. Chairman, I offer an amendment. Mr. Chairman, I yield myself 3 minutes. The United States sugar program is an archaic remnant of a Depression-era policy to artificially raise prices of sugar. Today, it harms American companies and…
Mr. Chairman, I offer an amendment.
Mr. Chairman, I yield myself 3 minutes.
The United States sugar program is an archaic remnant of a Depression-era policy to artificially raise prices of sugar. Today, it harms American companies and consumers, while preventing developing nations from competing in the global market place. Everybody pays. U.S. consumers alone paid an additional 1 to $2 billion directly, and much more indirectly.
This is not a program that benefits our average family farmer. Under the 2002 farm bill, the sugar program has 42 percent of the sugar benefits going to the most profitable 1 percent of large corporate sugar farmers. This policy weakens our credibility for trade liberalization as it continues protection of sugar policies that restrict trade. These continuing subsidies are harming progress in the current Doha Round, a key component of which is to reduce unnecessary agricultural subsidies worldwide.
We saw an example in the discussion of the Australian Free Trade Agreement where, to keep our outrageous sugar subsidies in place, the United States acceded to Australia's position on maintaining monopolies for the export of wheat, barley and rice, therefore closing off export opportunities to United States farmers producing these crops.
It is, I think, outrageous in current American free trade CAFTA, where we are watching the door barely open over the next 15 years. If it were to pass, these countries would be able to export only 1.7 percent of the U.S. consumption.
This policy of supporting high-cost producers and limiting imports through quotas deprives more low, cost-efficient producers in developing nations. These protectionist policies in developed countries have deprived poor, desperately poor countries like Ethiopia, Mozambique and Malawi of $238 million in sales since 2001.
The current U.S. sugar program emphasis on overproduction has caused environmental degradation in environmentally sensitive areas, particularly the Florida Everglades and the Mississippi Delta wetlands. The down payment on cleaning up the Everglades that are significantly damaged by sugar production is nearly $8 billion.
Mr. Chairman, the impact on jobs in the United States is also unfortunate. The number of employees in sugar-using industries, an estimated 724,000 jobs, is 12 times the 61,000 sugar production jobs in the United States. It produces a loss of jobs as sugar-intensive industries like confectionery move to Canada and other low-cost areas. This is an opportunity today to correct that.
Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I yield myself 2 minutes.
(Mr. BLUMENAUER asked and was given permission to revise and extend his remarks.)
Mr. Chairman, I have great respect for the gentleman from Arkansas (Mr. Berry), but the fact is that the people who are involved with sugar are not going broke. The point I made is that the top 1 percent get 42 percent of the benefits.
We do not have a problem of sugar production in this country. First of all, we produce so much sugar and if it falls below the target level they just turn the sugar over to the government and walk away from the loans. In 2002, we were paying more than a million dollars a month just to store the surplus sugar, just to store the surplus sugar.
We have 41 other countries around the world that are ready, willing and able to go into the United States market, but are not able to do so. Some of us say we believe in free trade, but we will not allow free trade when it comes to sugar because it is so intensely protected.
I have here and include for the Record an open letter to the United States Congress and the President signed by 50 prominent academicians, consumer experts, trade advocates, taxpayer advocates, and people who care about the environment that talk about what an outrage it is to continue this pattern.
Mr. Chairman, we just heard ``people are not asking the government to take care of this.'' Wait a minute, the government absolutely is taking care of the sugar industry in this country.
I am not talking about the problems that genuinely affect family farms. If we were doing the right thing instead of lavishing subsidy on people who do not need it and funding the promise of the agriculture bill for things like environmental cleanup, we could help those family farmers. I think it is about time to get this in perspective and not confuse lavish sugar benefits with helping ordinary family farmers.
March 15, 2005.
Open Letter to The President and the U.S. Congress
Sour Subsidies--U.S. sugar policy is unfair to American consumers and
to poor countries; harms the environment
Summary: The current sugar policy in the United States--a
system of price supports and import restrictions--cannot be
justified on economic or humanitarian grounds. It imposes
high costs on U.S. consumers and taxpayers and causes job
losses in the U.S. In addition, the sugar program causes
enironmental damage and blights economic opportunities for
many small farmers in poor countries, primarily for the
benefit of a small group of well-off producers.
The U.S. sugar policy started 70 years ago during the Great
Depression as a temporary support program for U.S. growers.
The system of price supports and import restrictions allows
growers in the U.S. to charge consumers and other users
artificially high prices for sugar and other sweeteners,
currently more than two to three times the world market
price. During those 70 years, 18 presidential elections have
taken place, and still consumers and taxpayers are paying to
support sugar beet and sugar cane growers.
The sugar program is a transfer of wealth from those who
often can least afford it to a smalll group of sugar
producers. The American public transfers about $1.3 billion
each year to support the sugar beet and cane growers in the
U.S. The primary beneficiaries of the program are a few large
corporations rather than small family farm operations, as was
originally intended.
The disadvantaged lose the most when food prices are
manipulated to support sugar producers. American consumers
are forced to pay two to three times the world market price
for sugar. Because sugar is a key ingredient in many foods,
including whole grain breads, high-fiber cereals, and fruit
preserves, the higher prices have a disproportionate impact
on those families, who pay a larger percentage of their
income on food. As a result, families with children and
people on low and fixed incomes are hit the hardest by the
U.S. sugar program. Sugar reform would give American families
a real break for their food budget.
The miguided support policy destroys precious natural
habitats. The current sugar policy's incentives for
overproduction have caused environmental degradation in
ecologically sensitive areas, including the Florida
Everglades and the Mississippi Delta wetlands. The impact is
particularly acute in the Everglades, as the U.S. grows much
of its cane sugar in Florida, resulting in the diversion of
sorely-needed water from the country's most famous and
endangered wetland. Sugar producers are seriously polluting
these valuable wetlands to produce sugar that could be
produced with less cost and pollution in a number of other
countries. In addition, the U.S. is growing sugar beets with
high costs and poor sugar yields per acre on land that could
readily be shifted to crops with higher comparative
advantage, such as feedstuffs.
Domestic sugar policy has contributed to the loss of jobs
in the sugar-using industry. The number of employees in the
sugar-using industry--an estimated 724,000--vastly outnumbers
the 61,000 sugar production jobs in the United States. The
artificially inflated domestic sugar price increases the
costs of production for sugar-using industries, which has led
to some companies moving their facilities to other countries
and has added to U.S. job losses in these industries.
Sugar producers in developing countries bear the brunt of
rich countries' support programs. Domestic subsidies and
protectionism distort the price of sugar on the world market.
Poor farmers in developing countries--no matter how
efficient--cannot compete with sugar unloaded on the world
market by rich countries' subsidized producers, and a
valuable opportunity for achieving higher living standards is
lost.
The United States undermines its global leadership role in
promoting open trade by insisting on indefensible sugar
protectionism. While the U.S. promotes open trade in many
venues, it is one of the worst offenders in distorting world
sugar markets. The United States' exemption of sugar from
recent trade negotiations has undermined the country's
ability to negotiate and achieve more open trade with other
nations. This special protection of sugar has cost other U.S.
producers broader export opportunities and U.S. consumers the
chance to benefit from more open trade with these countries.
The U.S. sugar policy affects other economic and policy
objectives besides trade. Reforming one of the most
protectionist agricultural programs could contribute to
economic growth and stability in other parts of the world and
demonstrate U.S. willingness to embrace broader international
cooperation.
As a group of non-profit organizations representing
consumers, citizens, and taxpayers, we support a fundamental
reform of the United States' sugar policy.
Removing protectionist barriers to sugar around the world
could lower the price for U.S. consumers by 25 percent from
current, artificially high levels.
Reducing support in the U.S. could save consumers and
taxpayers up to $1.3 billion per year.
The net loss to the U.S. economy due to the sugar support
program in 1998, the most recent year for which analysis is
available, is about $900 million, according to the U.S.
General Accounting Office.
Reducing sugar cane production in Florida could improve
environmental quality as water-retention capacity in the
Florida Everglades watershed could be increased.
Lowering sugar overproduction can help reduce the impact of
pesticide and fertilizer usage on the environment.
Reducing costs for sugar-using industries could help retain
workers.
The benefits for developing countries would also be
substantial:
If rich countries' sugar subsidies and trade barriers were
eliminated, it is estimated that the world market price of
sugar could rise by almost 40 percent, providing valuable
economic opportunities. At the same time, consumers in
heavily protected markets such as the U.S. would still enjoy
an overall benefit of a reduction in prices of about 25
percent.
If the U.S. is serious about helping poorer countries, it
has to open up its markets for those countries' products,
which would help U.S. consumers and create employment not
only in poor countries but also in the large sugar-using
sectors in the U.S.
The undersigned urge our public and political
representatives to debate the need for reforming this
destructive policy that hurts consumers and taxpayers in the
United States, harms the environment, and holds back further
ecommic development in many poor countries around the world.
Frances B. Smith--Consumer Alert; Barbara Rippel--
Consumer Alert; Rhoda
Karpatkin--Consumers Union; Mark Silbergeld--Consumer
Federation of America; Pam Slater--Consumers for World
Trade; John Frydenlund--Citizens Against Government
Waste; Dennis Avery--Hudson Institute--Center for
Global Food Issues; Alex Avery--Hudson Institute--
Center for Global Food Issues; Greg Conko--Competitive
Enterprise Institute; Fred Smith--Competitive
Enterprise Institute; Fred Oladeinde--The Foundation
for Democracy in Aftica; Tad DeHaven--National
Taxpayers Union; Chad Dobson--Oxfam America; Philip D.
Harvey--DKT Liberty Project; Phil Kerpen--Free
Enterprise Fund;
Clayton Yeutter--Former U.S. Trade Representative and
former U.S. Secretary of Agriculture; Nathaniel P.
Reed--Chairman Emeritus, 1000 Friends of Florida and
former Assistant Secretary of the Interior; Professor
William L. Anderson--Dept. of Economics, Frostburg
State University; Professor James T. Bennett--Dept. of
Economics, George Mason University; Sam Bostaph,
Ph.D.--Associate Professor and Chairman, Dept. of
Economics, University of Dallas; Donald J. Boudreaux--
Chairman, Dept. of Economics, George Mason University;
John Bratland, Ph.D.--Economist, U.S. Department of the
Interior;
Peter T. Calcagno, Ph.D.--Assistant Professor of
Economics, Department of Economics and Finance, College
of Charleston; Professor Lloyd Cohen--School of Law,
George Mason University; Professor John P. Cochran--
Metropolitan State College of Denver; James Rolph
Edwards, Ph.D.--Professor of Economics, Montana State
University-Northern; Professor Kenneth G. Elzinga--
Robert C. Taylor Professor of Economics, Dept. of
Economics, University of Virginia; Professor William P.
Field--Dept. of Economics (emeritus), Nicholls State
University; Professor Gary Galles--Professor of
Economics, Pepperdine University; S. D. Garthoff--
Adjunct Faculty, Dept. of Economics, Summit College--
The University of Akron;
Professor Robin Hanson--George Mason University; David R.
Henderson--Research Fellow, Hoover Institution; Robert
Higgs, Ph.D.--The Independent Institute; Professor
Steven Horwitz--Professor of Economics, Associate Dean
of the First Year, St. Lawrence University, Canton, NY;
Professor Daniel Klein--Dept. of Economics, Santa Clara
University; Professor Laurence Iannaccone--Dept. of
Economics, George Mason University; Dr. Arnold Kling--
www.econlog.org; Professor Dwight R. Lee--Ramsey
Professor of Economics, University of Georgia;
Professor Leonard P. Liggio--Atlas Economic Research
Foundation; Professor Roger Meiners--University of
Texas at Arlington;
Professor Andrew Morriss--School of Law and Dept. of
Economics, Case Western Reserve University; Professor
Svetozar Pejovich--Dept. of Economics (emeritus), Texas
A&M University; Dr. William H. Peterson--Independent
economist, Washington, DC; Professor Adam Pritchard--
University of Michigan; Professor Gary Quinlivan--Dean
of the Alex G. McKenna School, St. Vincent College;
Professor Charles K. Rowley--General Director, The
Locke Institute; Karen Vaughn, Ph.D--Professor of
Economics (ret.), George Mason University; Professor
John T. Wenders--Dept. of Economics, University of
Idaho; Bart Wilson--Associate Professor, Dept. of
Economics, George Mason University; Professor William
Woolsey--Dept. of Economics, The Citadel.
Mr. Chairman, I yield 4 minutes to the gentleman from Arizona (Mr. Flake), the coauthor of this amendment.
Mr. Chairman, I yield myself 1 minute. I have great respect for my friend from Florida, but I have three brief observations. First of all, the notion that there is no cost to the taxpayer is just simply not the case. Consumers in this country by all independent estimates are paying between $1 billion and $2 billion a year extra in the price that they pay for sugar and sugar-related products. Second, there is never a good time to consider this. This amendment is not pulling the rug out from underneath sugar producers. It would be a 6 percent reduction in the lavish Federal subsidy. This will be a good signal for people to get serious about making a change.
I heard my friend from Virginia talk about the problem under CAFTA. That is an example of how hard-nosed and extreme the sugar interests are. Getting 1.7 percent of the market over 15 years is such that they consider it being tantamount to World War III. I think that is an example of the mind-set of this industry, how intransigent they are and why we need to address it today.
Mr. Chairman, I reserve the balance of my time.
Mr. Chairman, I yield myself 1 minute. No one has more respect for the gentleman from Idaho than I have, but the dynamic that is going on here is that we provide the most lavish support for sugar production in the world. These other countries cannot compete with us. I have mentioned and I have entered into the Record areas where countries like Mozambique and Malawi, where they are losing business, they cannot compete in terms of what the United States does with our dramatically subsidized sugar.
Were we to stop this program, and bear in mind I am not suggesting stopping it, everybody is exercised because we are talking about a 6 percent reduction, but if we were to go to a world market price we would find that the world price would increase but we would find that prices in the United States would decrease, and we would save damage to the environment and to United States production. I think it is a win- win situation.
Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from Arizona (Mr. Shadegg).
Mr. Chairman, I yield myself such time as I may consume.
It is a fascinating debate that we are having. I appreciate the spirited nature, and I hope that it leads to a broader discussion, because I hope each and every Member does his or her own individual research and considers some
of the fantastic claims that have been made here.
I had one of my colleagues say, ``We have the most open market in the world for sugar in the United States.'' Let us take a step back and have people examine that, because no expert that I have heard suggests that that is remotely the case.
``Sugar does not receive any special benefits or treatment''? Not true. Sugar alone has this system of keeping out production from 41 other countries except under tightly controlled circumstances and providing lavish guarantees to many large sugar producers.
The point I made earlier, was not that somebody couldn't cite a poor sugar farmer that he or she may know someplace. The point I made is that if the Members care about poor farmers and other areas of agriculture, take a look at this program. Forty-two percent of the benefit goes to the top 1 percent of the producers. It is outrageous. It is how they are able to become the top agricultural contributors to political campaigns in the United States Congress, even though sugar farmers are only 1 percent of our farm production.
I heard the gentleman from Florida (Mr. Foley) say he did not care about people in Mozambique. It was about jobs in Belle Glade, FL. That is an interesting quotation to come from him as a champion of open trade and a member of our Committee on Ways and Means. I will look forward to hearing his saying something like that when it comes to CAFTA or the next trade legislation. That is completely contrary to what I have understood his position to be in the past.
The fact of the matter is that when it comes to lavish support for the sugar industry, we turn a blind eye, either for politics or for sentimentality, but the fact is that we are consistently, consistently, paying raw sugar prices two to three times the world price. Do not take my word for it. Go to the nonpartisan Congressional Research Service that we rely upon or, as I mentioned, the experts that I am putting in the Record.
We consistently, consistently in this country pay more. That is why we are taking $1 to $2 billion out of the pockets of the consumer and into the hands of the sugar industry, and that is the tip of the iceberg in terms of the costs.
I mentioned Florida. We would not be putting 450,000 acres in sugarcane production in Florida draining into the Everglades if it were not for this lavish program. But we are as a Congress because of the legacy of the explosive growth.
I will wrap up by saying there is a lot to say. I urge colleagues to examine it and to approve the Blumenauer-Flake amendment.
Mr. Chairman, I demand a recorded vote.