A sugar policy that's costing America jobs and money

Saturday, January 29, 2011; 6:30 PM

CONGRESS AND the Obama administration are in the market for fresh ideas to create jobs. Or so we are told. So far, however, we haven't seen too many specifics - but that may be about to change. Two senators, one from each party, have introduced legislation that would phase out the costly, job-destroying federal sugar program. Democrat Jeanne Shaheen of New Hampshire and Republican Mark Kirk of Illinois call their bill the Stop Unfair Giveaways and Restrictions (SUGAR) Act. Despite the cutesy title, it's a seriously necessary proposal.

Current law is a pastiche of protectionist measures that drives up prices for consumers in two ways. First, 4,700 U.S. sugar cane and sugar beet farmers share a government-guaranteed 85 percent of the U.S. market; the remaining 15 percent gets divided among some 40 lucky sugar-exporting countries, plus Mexico, which recently started exporting here under the North American Free Trade Agreement. Second, the government guarantees minimum prices for both raw cane sugar and refined beet sugar. The combined effect of these measures has been to keep the U.S. price well above the world price. According to Ms. Shaheen, consumers pay an extra $4 billion for their food because of these policies.

When food costs more, consumers buy less of it, and processors must cut production. Therefore, U.S. sugar policy costs jobs among bakers, candy makers and other food processors. Estimates vary; Promar International, an agriculture consulting firm, produced a figure of 112,000 jobs lost between 1997 and 2009. In 2006, the Commerce Department estimated that the sugar program cost three manufacturing jobs for each job it saved in sugar growing and harvesting. And, by the way, job preservation in U.S. sugar growing and harvesting came at the expense of agricultural employment in poorer sugar-producing countries.

Ms. Shaheen and Mr. Kirk have offered President Obama and the Republican leadership in the House a common-sense way to keep their promises to get rid of unnecessary government regulation and liberate the job-creating energy of the market. As such, it's also a good early test of the sincerity of those promises.

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