Every Day Is a Holiday for the Sugar Industry, Thanks to Our Insane Sugar Policies

by Veronique de Rugy

Happy Halloween! According to the National Retail Federation, candy sales for Halloween are estimated to reach $2.2 billion this year, up from $2.08 billion in 2013; Halloween alone accounts for 4 percent of our candy consumption. That’s a bit irksome for some parents, but it’s great news for the sugar industry.

But here’s the thing: Thanks to federal subsidies, it’s almost like every day is Halloween for the sugar lobby. The U.S. has protectionist tariffs on imported sugar, federal loan guarantees, and government-planned production quotas, which combine to push sugar prices up quite significantly. Andrea Castillo and I have a piece today in Real Clear Market explaining how it works:

U.S. sugar prices have far exceeded world markets for decades. From 2000 to 2014, the U.S. price of sugar was, on average, roughly two times the world price. Such a large price discrepancy indicates a major inefficiency. The culprit? Our nonsensical domestic sugar policies that rival only the former Soviet Union in their inconsistency, corruption, and almost comical injustice.

How do these programs work? First, the U.S. Department of Agriculture (USDA) runs a complex loan program for private sugar producers to ensure guaranteed prices for processors and growers. Next, the USDA imposes trade restrictions on foreign sugar imports to prevent international competition, thereby raising U.S. sugar prices over world sugar prices. Last, the USDA actually determines how much sugar should be produced in the U.S. each year and divides “marketing allotments,” or production quotas, among chosen firms.

In short, the USDA centrally manages a protected sugar cartel and boosts incumbent profits from Washington. 

As you can see in this chart, our elaborate subsidy system keeps American sugar prices consistently above world prices:

The insanity of our sugar policies doesn’t stop there. As you can see in the chart, the price of sugar has been stubbornly fallen since 2011. In response, the federal government has been buying up surplus inventory to push prices back to the level the sugar lobby would like. Thanks to that, this year, your Halloween bounty is not only more expensive than it should be, it is also more expensive than last year. (I have more charts on the issue here.)

Finally, Nick Gillespie at Reason points to a conversation between Bloomberg View’s Virginia Postrel and Samira Kawash, the author of the delectably titled book Candy: A Century of Panic and Pleasure. Kawash explains how and when candy became associated with Halloween:

Would you believe the earliest trick-or-treaters didn’t even expect to get candy? Back in the 1930s, when kids first started chanting “trick or treat” at the doorbell, the treat could be just about anything: nuts, coins, a small toy, a cookie or popcorn ball. Sometimes candy too, maybe a few jelly beans or a licorice stick. But it wasn’t until well into the 1950s that Americans started buying treats instead of making them, and the easiest treat to buy was candy. The candy industry also advertised heavily, and by the 1960s was offering innovative packaging and sizes like mini-bars to make it even easier to give out candy at Halloween. But if you look at candy trade discussions about holiday marketing in the 1920s and 1930s, Halloween doesn’t even get a mention.

The whole thing is worth reading here

But for now, enjoy your overpriced Halloween candy!

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