I am not sure you could find a government policy more screwed up than what the government does to manipulate the price of sugar.

Currently the federal government guarantees sugar producers a minimum price for their sweet product. This doesn't cost the government a dime because import restrictions have successfully kept the price above the minimum. However a provision of NAFTA is about to change all of that and allow Mexico to export to the US as much sugar as it wants.

In the recent farm bill passed by the house there is a provision that calls for the government to buy up excess sugar and sell it to ethanol producers. This is an idea beyond even normal Washington Stupid.

First, what exactly is excess sugar? Is that any sugar above what is currently imported? I excess sugar the amount the government needs to buy to keep the price at its currently artificially high levels?

And who are they going to buy this sugar from? are the handouts going be paid to US sugar producers or Mexican producers?

And why would ethanol producers want to buy sugar from the government? The only possible reason would be because they can buy it at less than the market price.

So the government is going to buy sugar to drive up the price, so they can sell it for less than the market price they established.

The benefits go to the handful of US sugar producers, Mexican Sugar producers and ethanol producers.

The cost are born by anyone who purchases sugar for anything other than making ethanol, and all of us who have to pay higher prices for goods containing sugar while our tax dollars are being used to cover the government's losses in the sugar market.

Why not let the market set the price for sugar and leave it at that?

Posted by: Stephen Macklin at 02:56 PM | Comments (1) | Add Comment