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June 26, 2008
The gap in Big Sugar's smile
Posted: 10:49 AM ET
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A U.S. Sugar Corp. mechanical harvester cuts sugar cane in a field outside of Clewiston, Fla., Nov. 2001.
A U.S. Sugar Corp. mechanical harvester cuts sugar cane in a field outside of Clewiston, Fla., Nov. 2001.

Steve Turnham
AC360° Staff

Big Sugar's sweet deal with the U.S. Government is looking a little shakier today with the news that one of the nation's largest sugar producers, U.S. Sugar Corp., is closing shop and selling it's cane fields to the state of Florida.

For decades now American sugar producers have benefited from an arcane system that keeps sugar prices in the U.S. well above world prices. Despite loud complaints from candy manufacturers, many of whom have packed up and left for countries where sugar is cheaper, the propped up prices have survived.

It's simple political math. The average consumer barely notices the added cost, because the high price of sugar adds just pennies to the products we buy at the supermarket. But all those pennies add up to a huge payoff for the sugar industry: subsidies in the farm bill that just passed Congress are estimated to be worth about $10 billion over the next ten years.

No surprise then that Big Sugar has lobbied hard and effectively to keep the price supports in place, handing out millions of dollars over the years to friendly politicians, who in turn have resisted the efforts of budget hawks to knock out the price supports.

U.S. Sugar got $1.75 billion for its Florida cane fields. That's a nice payoff for the company and its shareholders, a good deal for environmentalists concerned about the Everglades, but a big blow to an industry that has relied on power and influence to keep Washington on its side.

11 Comments
11 Comments
Annie Kate   June 26th, 2008 11:09 am ET

How much of the sugar industry did the Florida fields represent in the US? As an environmentalist I am glad the land is coming back for the Everglades. As a consumer I worry about food quality of food not made or grown in America and subject to the USDA's regulations. So what's the 360 on this one??

Annie Kate
Birmingham AL

Cindy   June 26th, 2008 11:12 am ET

I had no idea that our sugar prices here in the states were way higher than any where else! I mean it doesn't cost but a little over 2 dollars here for a 5 lb bag. Who would have thought that that was high!?

I can not believe that they get so much money from the government in subsidies!! But hey...they are just like most other big businesses! They send their lobbiest in to congress, pay off some people and get the laws passed that they want. No surprise there!!

Cindy..Ga.

GF   June 26th, 2008 11:41 am ET

Aren't we the taxpayers paying the $10 billion in subsidies so were paying more than just the added pennies to the products we buy.

Tracey Anderson - Boston, MA   June 26th, 2008 12:11 pm ET

I love chocolate very much but I'd rather see the everglades back to their original state.

And it's about time a company loses it's holdover the government.

Will this make Crist a VEEP? Probably not. If he relly wnats this to happen he will stay the govenor to see this project through.

Susan   June 26th, 2008 2:36 pm ET

Steve:

I would have thought Coke & Pepsi determined what sugar prices were. They are the largest user of sugar and essentially they sell sugar/water.

Susan
Phoenixville,PA

Miss Autumn Song Cha   June 26th, 2008 3:09 pm ET

Dear Keeping Them Honest,

Well, If the U.S. Sugar Corporation wants to go state-wide, rather t

than national, it might be a good idea. There are many people with

diabetes in this country. We could ship the sugar to the states, and

not have to worry about blaming U.S. government for obesity,

diabetes and other diseases related to over consumption of sugar!!

=)

Sincerely yours,

Miss Autumn Song Cha

Romeoville, Illinois 60446

Steve Turnham   June 26th, 2008 5:08 pm ET

Thanks for all the comments. A couple of follow up points:

Annie: to your question about whether foreign producers are subject to US regulations, the short answer is no.

One of the many complexities of US sugar policy is that a few countries are permitted to sell sugar to the US market under a favorable tariff regime.

Last year Joe Johns and I visited one of the biggest exporters, the Dominican Republic, to look at how the sugar we eat is produced there. Much of it is harvested by Haitian migrant workers under some very difficult conditions. US sugar companies say that without the price supports, more of our sugar will come from overseas. If that happens, you can expect greater scrutiny of foreign labor practices.

Cindy: High US prices are the reason Life Savers, which were once made in Illinois, are now made in Quebec. Another company, Brach's, left Chicago in 2004, and 1,100 people lost their jobs.

As for Coke's market power, in the 1980's Coke switched from sugar to high fructose corn syrup. Same reason.

Sabrina in Los Angeles   June 26th, 2008 6:28 pm ET

Sugar is bad to eat but we could have used it to make Alchool (sugar ethanol). It has an 8 times higher yield than corn!

It is good that the everglades will be re-instated but overall, I think that the environment would have faired better with the sugar in our tanks instead.

The government sure messes things up for the sake of money.

Rob   June 26th, 2008 11:40 pm ET

I have to go with Sabrina on this one. After watching the "We Were Warned" (or some title to that effect) special on CNN last week, I became very intrigued by what Brazil has been able to do with sugar ethanol and how much more efficient it seems to be than corn. As a Barack supporter, I was disconcerted to hear McCain come out in favor of following Brazil's lead, and then to hear allegations of Baracks ties to the corn ethanol industry, and his alleged efforts to block the development of sugar ethanol in the US. Steve, do you know if there is any truth to this? I'd like to get the facts.

Pattty - Florida   June 26th, 2008 11:57 pm ET

This deal is going to haunt Florida for centuries, really disappointed in Christ but he sold the insurance companies a good deal too. So how many of the upper management are GOP's? But like BEETS made in s. america they got their act together a long time ago. Competition will get the speculators grreed in line and if anyone had guts they would put them in their place. I can remember when California's car insurance got outrageous and the govenor put a ulltimatum to the big cats ieither cap the prices or I will. Now thats a man with guts.

Patrick Henry, Fort Myers   June 27th, 2008 12:29 pm ET

U.S. Sugar will just off-shore their sugar production–it is unlikely they'll just throw in the towel because Uncle Sugar won't subsidize the sugar under a Democratically controlled government. This will decrease the price of sugar in the short term... but it will decimate two U.S. cities in Florida whose primary revenue is from the sugar industry.

Win one....lose one.
The American way.

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