FYI:What you need to know about Trade Protection/America rethinks its free-trade tradition as tide of imports rises. Quotas keep US sugar prices sweet for producers, bitter for consumers
MOST trade barriers may not make economic sense. But, properly laid out, they can approach political genius. Right now, as Congress debates the farm bill, sugar producers and processors are making their pitch for the sugar program. In glossy booklets, they describe how the program preserves jobs, maintains the US industry, ensures abundant sugar at stable prices, and costs taxpayers nothing.
Left unsaid is how much the program costs consumers.
Currently on the world market, a pound of sugar costs slightly under 3 cents. In the US, the wholesale costs for the same sugar is more than seven times that. To be sure, that 18-cent gap is exaggerated.
So many countries protect their sugar markets that the so-called world market represents only a fraction of the world's sugar, most of which is sold at higher prices.
Still, US consumers are footing part of the bill to preserve the nation's sugar industry. Even with the program the industry is in a very slow decline. Without it, economists predict at least half the US growers would be wiped out.
How is sugar propped up? Through quotas.
Roughly one-third of the sugar consumed in the United States comes from other countries. Each year, the US Department of Agriculture determines how much each country will be able to bring in.
This year's quota for the Dominican Republic, this country's largest foreign supplier, is 447,000 tons. Certificates for that amount go to the US embassy there and divided among the private and government-run sugar companies.
In place from 1934 to 1974, the US sugar program has held a much more tenuous position in recent years. Growers did not have a program for the remainder of the 1970s and nearly failed to get one included in 1981 farm legislation. In this year's fight to renew that four-year legislation, the sugar producers have been joined by corn growers and processors. Why? Because corn sweeteners have been able to undercut the protected sugar price and boost corn sales. Though they are marketplace competitors, the two industries have become political allies over the program.
``I must guard myself against being overconfident,'' says Robert Hughes, president of the Hawaiian Sugar Planters Association. Nevertheless, he was optimistic after a recent trip to Washington, D.C., that a sugar program would be passed.