Sugar Cane field in the Everglades
I fished a book out of the pile that I ordered last year but hadn’t yet gotten around to reading. I was actually looking for something else, but noticed this one and realized that I had completely forgotten it. I flipped through it to get a feel for it and came upon a section that I though might interest readers of this blog.
The book, The Big Ripoff, is catalog of corporate welfare abuses of the public trust. It was written by Timothy Carney, who, from his bio, appears to be a journalist of the pretty far right of middle persuasion. In my years of political observation, I’ve noticed that on the subject of corporate welfare the far right and the far left are blood brothers. Both despise the idea of tax dollars being shoveled to big business. Where they part ways is in their ideas as to what should be done with this tax money (our money) should it be kept out of the hands of corporate America. The left believes it should be diverted to social causes whereas the right feels it should be given back to us (or never taken in the first place) to spend as we see fit.
The family, through its company Flo-Sun, Inc., and many related companies such as Florida Crystals, controls about one-third of Florida’s sugar production. The Fanjuls, together with their elder in the sugar industry, U.S. Sugar, own a majority of the cane fields in south Florida. These massive corporations might not exist–indeed there might be no sugar cane industry in Florida at all–were it not for corporate welfare.
Very literally, the government has laid the foundation for their sugar business. Without the intensive and expensive federal drainage of the Everglades, it would be impossible to plant sugar–the land would be too wet, and covered with saw grass and mustard trees.
After building the canals and dikes and dredging the lakes, the taxpayers continue to pay for the maintenance of the whole system that keeps the Fanjul’s land dry at the expense of the ecosystem. According to an estimate from the past decade, taxpayers pay about $52 million a year for the Army Corps of Engineers to control water flow for Everglades agriculture–mostly sugar.
Enter the next government program from which the Fanjul’s benefit: the U.S. Department of Agriculture (USDA). The USDA loans all sugar growers 18 cents for every pound of cane sugar they grow, and beet sugar farmers get about 23 cents a pound. In recent years, these loans have averaged more than $8 billion annually, with the Fanjuls’ receiving an estimated $65 million.
The growers set the sugar aside as collateral. That means that if they can’t or don’t want to pay back the loans, made at lower rates than the market would dictate, the government takes their sugar, and forgives the debt. In other words, if you grow a pound of cane sugar, you know that the very worst you can do is sell it to the government for 18 cents–more than twice the going world price for sugar for many years.
In 1999, for example, U.S. taxpayers were left on the hook for $105 million after Florida sugar cane farmers were unable to unload 590 million pounds of sugar for more than 18 cents a pound. During most of that year, the average price of raw sugar was 6.55 cents per pound.
But this is all chump change compared to the real sugar ripoff, which costs Americans $1.9 billion per year–all of which lines the pockets of sugar farmers, including the Fajuls. This transfer of wealth happens because the Fanjuls and other American sugar growers charge (and American consumers have little choice but to pay) more than twice the world price for sugar.
How do sugar makers get away with charging that much for sugar? They make sure the government keeps the world’s sugar out of the United States. The U.S. government allows each country’s sugar growers to sell only a certain amount of sugar into the United States. These quotas artificially limit the supply of sugar Americans can buy. This drives up not only the price of a bag of sugar but also of candy bars, soda, and any other food that contains sugar. From 1998 until 2004, American consumers have paid an average of about $1.8 billion more for food annually because of these import quotas. The General Accounting Office (GAO) also estimated that almost half that money goes to large sugar growers, such as the Fanjuls.
What have all these sugar price supports gotten us, the citizens? Well, in a sense it has been responsible for creating a monster that many believe is one of the root causes of much of the obesity afflicting many of us taxpayers today.
…sugar growers’ brethren, corn growers, like this deal, too. The artificially high price of sugar has created the market for high fructose corn syrup, which American food and drink makers use where the rest of the world uses sugar. Corn growers also get subsidies, tariff protection, and special tax breaks.
I wrote in an earlier post on the difference in taste of Coca Cola and other U.S. based soft drinks bottled in Mexico. Toward the end of this post, I mentioned a piece by John Stossel on an interview with Dwayne Andreas, the former chairman of Archer Daniels Midland, the giant company that makes high-fructose corn syrup and gets grotesque amounts of largess from our government (i.e. you and me) for doing so. It’s an interesting and infuriating interview.
If not for corporate welfare, there might be no cane sugar grown in the United States. This would be a good thing. Without influential families and businesses like the Fanjuls to protect, Washington would drop its barriers to the world’s sugar. The world sugar price might rise slightly when the United States started buying more foreign sugar, but American’s, who typically pay 50 percent to 100 percent more than the world price, would undoubtedly save on both their grocery bills and their tax bills. The Everglades might recover, and candy makers might move back to the United States. But that’s all wishful thinking.
And we all might have our health restored if sugar got cheaper and HFCS took a powder, but don’t count on it. The HFCS genie (monster, more like) is out of the bottle. As a consequence of our transferring (via our elected officials) billions into the pockets of the Fanjuls and their brethren thanks to sugar price supports, HFCS was developed to provide sweetening power to industry at a price less dear than sugar. Along the way industry discovered that not only could HFCS sweeten as well as sugar, it sweetened even better. And it works better in manufacturing process for ice cream and a multitude of other processed foods that formerly used plain old sugar. So, HFCS is here to stay.
Now we’ve reached the point at which our government is forking money over to the sugar industry and the HFCS industry, both of which are undermining the health of America. At the same time, this same government is funding the U.S. Nutritional Guidelines (our old friend the Food Pyramid), which encourage us to eat plenty of complex carbohydrates. And the same government is worried about the burgeoning obesity and diabetes epidemics and funding all sorts of groups to tell us we need to reduce the amount of fat in our diets.
It would be almost comical if it weren’t so tragic.