Senator Shaheen spoke on the Senate floor today to emphasize the need for reforms to the sugar program. As part of her ongoing efforts to eliminate outdated programs and protect taxpayers, Shaheen has introduced two bipartisan, fiscally responsible amendments to the farm bill that would eliminate or reform unnecessary subsidy programs.
Below are her remarks, as prepared for delivery.
As the Senate considers the Farm Bill, I’d like to thank Senators Stabenow and Roberts – the Chair and Ranking Member of the Agriculture Committee – for their work to advance this important legislation. In New Hampshire, many of the programs authorized in the Farm Bill are critical for our farmers and rural communities, as well as for the protection of our natural resources. I hope we are able to have a full debate on the bill this week.
This measure makes many needed reforms to our farm programs and helps reduce the deficit. But there is one glaring exception – the bill contains no reform to the sugar program.
The sugar subsidy is unique. By artificially restricting supply, the federal subsidy program keeps prices for sugar in the United States at nearly twice the world average. These high prices hurt consumers and they hurt businesses – a recent study found that the program costs Americans $3.5 billion.
Let me tell you how the subsidy works.
First, the federal government sets a floor on sugar prices through guarantees. These price floors ensure that sugar growers and processors will always receive a minimum price for sugar.
But sugar prices have been far higher than this minimum price for years now, thanks to some egregious government controls on sugar.
Under the sugar subsidy program, the federal government sugar growers how much they can grow. These restrictions – called marketing allotments – limit how much sugar is available on the market and restrict the ability of buyers and sellers to trade sugar freely. No other U.S. crop is subject to these kinds of government controls. As a result, in the United States we have severe supply shortages, which keep sugar prices high.
The last component of the subsidy program is trade restrictions. The federal government severely restricts the amount of sugar that companies can import into the United States. Only about fifteen percent of sugar in the United States is imported at lower, world average prices.
No other crop is subject to the kind of restrictions and price controls that I have just described. The result is a subsidy that hurts hundreds of thousands of businesses and consumers, while only benefitting about 4,700 sugar growers.
And yet, the Farm Bill before the Senate contains no reform to this subsidy program. I believe the Senate should repeal this subsidy so that prices are determined by the market instead of government controls.
For the past year and a half, I have enjoyed working with my colleague, Senator Mark Kirk of Illinois, on bipartisan legislation, the SUGAR Act. The SUGAR Act would phase out the sugar program over several years, eliminating government control of sugar prices.
While Senator Kirk cannot be here today as he continues his recovery, I am pleased that a broad bipartisan group of my colleagues have joined us in support of sugar reform. In particular, Senators Lugar, McCain, Durbin, Toomey, Lautenberg, Coats, Portman, Feinstein and my colleague from New Hampshire, Senator Ayotte, have called for elimination or significant reform for the sugar program.
This is a big concern for us in New Hampshire, where we are the American home of Lindt Chocolate, as well as many small candy companies.
As you can see in this chart, American manufacturing companies like Lindt pay almost twice the world average price for their sugar. In fact, prices have gone up considerably since Congress passed the last Farm Bill in 2008.
The program is able to keep these prices so high because it distorts the market. In addition to minimum prices guaranteed by the government, the federal government drastically restricts the supply of sugar in the United States. Only about 15 percent of sugar sold in the United States comes from abroad, thanks to severe import restrictions. The government also controls how much each individual sugar processor can sell, further restricting supply on the market. The result of these government controls are the artificially high prices you see here.
These high sugar prices hurt job creation. According to the Department of Commerce, for every one job protected in the sugar industry through the program, we are sacrificing three jobs in American manufacturing. A recent study suggests that the program costs 20,000 American jobs each year. In addition, a recent analysis found that the program costs consumers $3.5 billion every year in the form of artificially high sugar prices.
Now, those are startling numbers. But let me give you an example of how this program hurts small businesses in New Hampshire.
Granite State Candy Shoppe is a small, family-owned candy manufacturing company in Concord, New Hampshire. Sugar is the company’s most important ingredient. Jeff Bart, the owner, tells me that the artificially high cost of sugar has forced the company to raise prices on their goods. The program has also prevented the company from hiring new workers as quickly as it would like to. While Granite State Candy Shoppe has plans to grow and expand, the sugar program is slowing down that expansion.
Granite State Candy Shoppe is just one of many companies who want to grow, but are forced to slow down their expansion due to an outdated, unnecessary government program that benefits relatively few sugar cane and sugar beet growers nationwide.
High sugar prices also put American companies at a competitive disadvantage to foreign manufacturers. Since foreign companies can get sugar much more cheaply, it is tempting for American companies to look elsewhere to manufacture their candy.
In fact, low sugar prices are a selling point for foreign governments encouraging candy companies to re-locate.
As you can see here, a recent Canadian government brochure boasts that Canada is the “location of choice for manufacturers of confectionery products wishing to supply North America.”
The reason is simple: “Canadian sugar users enjoy a significant advantage – the average price of refined sugar is usually 30 to 40 per cent lower in Canada than in the U.S.”
This outdated program that puts American companies at a competitive disadvantage should go. That is why I sponsored a bill with my colleague Senator Kirk, the SUGAR Act, to phase out the program over a course of several years. This legislation has many bipartisan cosponsors, including Senators Durbin, Toomey, Portman, Coburn, Corker, Feinstein, Alexander, and Scott Brown.
Consumer and business groups have been calling for the repeal of the sugar program for years now. The Consumer Federation of America and National Consumers League have joined business groups such as the U.S. Chamber of Commerce and the National Association of Manufacturers in support of the amendment. These groups support this amendment because they recognize that special interests are hurting consumers and American businesses.
I urge my colleagues to support our amendment, which will help grow small businesses and create American jobs.
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