Subsidized by the USDA, U.S. sugar programs “guarantee relatively high prices for domestic sugar.” Compared to other U.S. agricultural farms, the report found that sugar farms are “substantially more profitable per acre,” costing consumers between $2.5 to $3.5bn per year, while the yielding net costs to the economy were $1bn per year, the report estimated.
The program’s economic discrepancy can lead to unemployment sugar-reliant industries, most notably confectionery manufacturing, GAO reported.
Tariff restrictions based on outdated data, GAO issues recommendations for improvement
“The program also restricts the amount of sugar entering the U.S. at a low tariff. The tariff restrictions are applied using a method based on 40-year-old data that doesn't reflect current market conditions. This has led to fewer sugar imports than expected,” the report said.
GAO issued the following recommendations to the USDA and Office of the U.S. Trade Representative (USTR) agencies:
1.) USDA should consider changing how it allocates tariff-rate quotas for raw sugar in order to improve the efficiency and effectiveness of the sugar market (e.g. first-come, first-served or auction-based methods)
2.) USTR should evaluate alternative World Trade Organization (WTO) raw sugar tariff-rate quota allocation and reallocation methods to see if they are consistent with international obligations and US law, and whether they have any foreign policy implications.
3.) Once USTR and the USDA have completed their evaluations of the WTO raw sugar tariff-rate quota allocation methods, the USTR should use the results of those evaluations to determine whether the US should continue using the current method, or select an alternative method.
Alliance for Fair Sugar Policy supports "commonsense updates to the U.S. sugar program"
On behalf of the Alliance for Fair Sugar Policy, Galvin Colin, executive director of the organization affirmed GAO’s findings. He elaborated further to FoodNavigator-USA, citing the need to update the sugar program’s trade rules to “ensure that agreed-upon volumes of imported sugar are actually available to manufacturers.”
“Another way to increase supply would be allowing new and existing American sugar producers to make more sugar to meet demand. That seems basic, but it’s not possible under current rules. Further still, giving the USDA flexibility to bring more sugar into the market right when it’s needed by manufacturers and businesses – versus when arbitrary program deadlines allow it – would also be helpful,” he said.
Colvin said the current U.S. sugar policy drives a rift between food manufacturers and sugar producers. In a press release, he wrote that the GAO’s report “cuts through this false choice and shows that commonsense updates to the U.S. sugar program will not only increase supply chain reliability for manufacturers and lower costs for consumers, but also can be done while protecting the farm safety net for sugar producers.”
“The GAO reinforces what food and beverage manufacturers have been saying for decades: The current U.S. sugar program is not keeping pace with today’s farm and food economy. It’s time to rebalance the program to ensure an equitable outcome for all stakeholders and provide relief for American small businesses and consumers nationwide,” he added.
