The USDA is probably going to “intervene” in the sugar market, for only the zillionth time

posted at 9:31 pm on March 12, 2013 by Erika Johnsen

While the Obama administration has been working overtime to push their sequestration-scaremongering campaign, all about how $85 billion in cuts means that we won’t be able to afford White House tours or as many border patrol agents, it is amazing to me that stuff like this somehow never even gets a mention. Hey, how about the federal government stops playing sugar daddy to a bunch of entrenched special interests and tries allowing the free market to function like it’s supposed to, maybe? Is that too radical, do you think?

The U.S. Department of Agriculture runs a whole host of farm-and-rural programs and subsidies that in practice function as little more than corporate welfare for agribusiness, but one of the most onerous results of the government’s persistent interference is that the American sugar market now operates like a federally-sponsored racket, to the benefit of a handful of farmers but the detriment of the economy at large. The feds have piled on complex loan programs, import barriers, and production quotas, all of which are specifically meant to help keep domestic sugar prices artificially high — which means that not only are Americans’ taxes being devoted to protecting domestic sugar producers from free-market competition, but that consumers across the country are paying higher prices, too.

But of course, government interference reliably begets still more interference. Behold, the unnecessarily complicated and self-defeating vicious cycle that is the federal government’s unwavering support of the U.S. sugar market, via the WSJ:

The U.S. Department of Agriculture is likely to buy sugar in the domestic market this year in order to drive prices up and prevent defaults on loans made to sugar processors, according to a USDA economist.

The USDA estimates it would need to buy 400,000 tons of sugar to boost prices to an “acceptable level,” said Barbara Fecso, an economist at the department. A purchase of 400,000 tons would amount to about 4.4% of projected U.S. sugar production in the marketing year that ends Sept. 30. …

To entice ethanol producers to buy the sugar, the USDA’s Commodity Credit Corporation is expected to sell it at a loss of about 10 cents a pound, or $80 million total, Ms. Fecso said.

“If we acquire [sugar] in a down market, we have to get rid of it because we don’t want to own sugar, so we’re going to lose money,” Ms. Fecso said. “No matter how we dispose of it, there’s going to be a loss, so if we sell it [to ethanol producers], at least we’re getting something in return for it.”

Gee, thanks. It’s really too magnanimous of you to determine exactly what an “acceptable level” of sugar prices looks like on our behalf, the economic ripple effects be damned.


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Bring it on..
Sugar..
Mother Nature made..

Obama hate Mother Nature..

Electrongod on March 12, 2013 at 9:35 PM

I want to know how we’re doing with the helium reserve. After all, we need it for our fleet of blimps.

Wino on March 12, 2013 at 9:35 PM

I want to know how we’re doing with the helium reserve. After all, we need it for our fleet of blimps.

Wino on March 12, 2013 at 9:35 PM

There is still the height restriction..

The rule is.

No one can float above Obama..

Electrongod on March 12, 2013 at 9:36 PM

Sugar Sugar

Curtiss on March 12, 2013 at 9:42 PM

Mary Landrieu’s gig. Sugar queen.

wolly4321 on March 12, 2013 at 9:44 PM

Why bother buying the sugar? Just give the cash to the sugar processors so they can spend it on hookers and cocaine and leave the sugar prices low. At least that way the taxpayer still gets lower priced groceries which would be a better deal than what the current setup is.

sharrukin on March 12, 2013 at 9:44 PM

The party of Sugar Daddies tampering with sugar, priceless..

hillsoftx on March 12, 2013 at 9:47 PM

“If we acquire [sugar] in a down market, we have to get rid of it because we don’t want to own sugar, so we’re going to lose money,” Ms. Fecso said. “No matter how we dispose of it, there’s going to be a loss, so if we sell it [to ethanol producers], at least we’re getting something in return for it.”
=====================================

**Sugar Market Speculators**!!

canopfor on March 12, 2013 at 9:56 PM

I absolutely LOATHE these idiots!

“No matter how we dispose of it, there’s going to be a loss, so if we sell it [to ethanol producers], at least we’re getting something in return for it.”

How about we don’t purchase it to begin with you ignorant slut. How I wish these people physical pain.

D-fusit on March 12, 2013 at 9:57 PM

It’s almost time for Justified. I see them long hard times to come.

Curtiss on March 12, 2013 at 9:58 PM

one of the most onerous results of the government’s persistent interference is that the American sugar market now operates like a federally-sponsored racket, to the benefit of a handful of farmers but the detriment of the economy at large.

A handful of farmers also known as ADM. Movie was terrible, book is great
http://en.wikipedia.org/wiki/The_Informant_(book)

bayam on March 12, 2013 at 9:59 PM

Sweet. Bring it. Another Soetoro regime failure.

BHO Jonestown on March 12, 2013 at 9:59 PM

War on Sugar

sadsushi on March 12, 2013 at 10:00 PM

Sugar pill.
Sugar daddy.
Sugar coat it.
Sugar cookies.
Sugar mountain.
Sugar, sugar.
Sugar shack.
Sugar land.
Sugared.

He who has the price supports, makes the rules.

locomotivebreath1901 on March 12, 2013 at 10:01 PM

I haven’t forgotten Michelle Obama said last year that she wants to make food choices more fair in supermarkets. Something like that.

Can’t wait for Michelle to intervene in supermarkets.

JellyToast on March 12, 2013 at 10:04 PM

About a month ago…

http://www.landrieu.senate.gov/?p=news&id=3609

wolly4321 on March 12, 2013 at 10:05 PM

Maybe Obama should appoint Nanny Bloomberg as USDA head, and he could go after the sugar lobby. And corn.

I’d buy a ticket to watch that.

MTF on March 12, 2013 at 10:10 PM

The U.S. Department of Agriculture is likely to buy sugar in the domestic market this year in order to drive prices up and prevent defaults on loans made to sugar processors, according to a USDA economist

…huh?

KOOLAID2 on March 12, 2013 at 10:14 PM

Maybe Obama should appoint Nanny Bloomberg as USDA head, and he could go after the sugar lobby. And corn.

I’d buy a ticket to watch that.

MTF on March 12, 2013 at 10:10 PM

…he’d start licking everything!

KOOLAID2 on March 12, 2013 at 10:15 PM

OK… so liberals want to ban sugared sodas because they are bad for you, while liberals want to prop up sugar prices because the prices are too low.

We want you not to buy it, but we want you not buying it at a propped up price.

As long as the government loses money on the deal, though, we’re sure it’s the right thing to do.

Got it.

Wino on March 12, 2013 at 10:16 PM

There’s a whole lotta “huh”, there huh?

wolly4321 on March 12, 2013 at 10:17 PM

…when are they going to screw with my beer?

KOOLAID2 on March 12, 2013 at 10:25 PM

Only in a case like this could government officials believe that there would be a gain through a loss.

However, getting rid of government officials and allowing the free market to function properly could also be considered addition by subtraction.

DevilsPrinciple on March 12, 2013 at 10:25 PM

Again,, which is it? Higher cost? Or “no cost”?

This is mary landrieu from feb.18,2013.

http://www.landrieu.senate.gov/?p=news&id=3609.

I don’t presume to understand it, but I think Erika may be on to something here.

Hey Erika, can you put Landrieu’s commentary in perspective for me? I don’t understand the big picture. Is it just a secondary excuse for the subsidy?

wolly4321 on March 12, 2013 at 10:28 PM

So we pay for it twice. Insanity.

This is why we are importing sweets from Mexico and Europe.

Fallon on March 12, 2013 at 10:38 PM

To entice ethanol producers to buy the sugar, the USDA’s Commodity Credit Corporation is expected to sell it at a loss of about 10 cents a pound, or $80 million total, Ms. Fecso said.

Let’s see; 800,000,000 pounds of sugar at the current contract price of $0.1882/pound is $150,560,000, with no guarantee that the corn-a-hole crowd will buy the sugar.

And yet the ObamiNation can’t figure out either why government is too <expletive deleted> big or where to cut expenditures.

As Wile E. Coyote once said, “Brilliance, that’s what it is. Sheer, unadulterated BRILLIANCE!”

Steve Eggleston on March 12, 2013 at 10:38 PM

Federal loan guarantees, which are just preemptive bailouts, need to be axed yesterday. That they are a major underlying force in contorting our domestic policy is just sickening.

theperfecteconomist on March 12, 2013 at 10:44 PM

The real point of all this is to make sure that sugar costs more per serving than HFCS, so that all the soft drink and prepared food companies will continue to buy corn sweetener.

If the price of sugar drops too low, Archer Daniels Midland takes a bath, and all the senators they own will shriek.

Steven Den Beste on March 12, 2013 at 10:53 PM

Of course, that’s the world (ICE Contract 11) price with sugar coming from any number of countries with no duties imposed. The effective domestic (ICE Contract 16) price is a bit higher ($0.2103/lb) because it imposes duties on foreign-sourced sugar.

Don’t even get me started on the wholesale/retail price of refined sugar.

Steve Eggleston on March 12, 2013 at 10:59 PM

If the price of sugar drops then beverage and food manufacturers might go back to using it to flavor drinks and sweets instead of high fructose corn syrup (much to Archer Daniels Midland’s and the corn lobby’s disdain). That could reduce the growing incidence of Type II diabetes in our children.

That would then interfere with Barky and Moochelle and Nanny Blooberg’s ability to rule what the peons and the skoolchildren must and must not eat. Big Brother must not be interfered with……

viking01 on March 12, 2013 at 11:07 PM

Gee, thanks. It’s really too magnanimous of you to determine exactly what an “acceptable level” of sugar prices looks like on our behalf, the economic ripple effects be damned.

You are right, Erika. And I love you Erika. But someone we have to figure out how to get this point without sounding negative. You do sound negative. We need to make economic freedom romantic. My belief is that Ayn Rand failed miserably at this, but I do think it can be done.

thuja on March 12, 2013 at 11:08 PM

Only is it feasible in liberal minds for the government to at the same time purchase sugar to keep the price high, but ban the purchase of soft drinks in large sizes?

STL_Vet on March 12, 2013 at 11:15 PM

Sugar is more energy dense than corn for ethanol and using it won’t limit the supply of livestock feed driving up the price of just about everything from beef to cereal. So why exactly has corn been used instead of sugar?

John Deaux on March 12, 2013 at 11:42 PM

Can I safely assume we’re still feeding corn syrup to our cows as well, due to Federal fiddling in the corn market via ethanol, plus drought?

TexasDan on March 13, 2013 at 1:15 AM

This is all about white sugar.

RACISTS!

Shy Guy on March 13, 2013 at 2:12 AM

Sugar tastes better and is better for you than corn syrup.

hawkdriver on March 13, 2013 at 4:22 AM

Just stop subsidizing it.

And, yeah, take of the taxes on foreign suppliers while you’re at it.

Set the American people free to compete with the world on prices, you Nannystate government. You are a damned incompetent Nanny.

ajacksonian on March 13, 2013 at 7:17 AM

If we stop the subsidies, do we have to give back Hawaii?

LoganSix on March 13, 2013 at 7:47 AM

The U.S. Department of Agriculture is likely to buy sugar in the domestic market this year in order to drive prices up and prevent defaults on loans made to sugar processors, according to a USDA economist.

.
WAIT! How big are the loans outstanding? Are they more than $80 million, the amount planned to lose in this price-support scheme?

ExpressoBold on March 13, 2013 at 7:51 AM

I agree with everything the writer says. But I have a question – how much lower would sugar prices be without the fed interference?

A pound of sugar is only about $1 or $2 where I live.

I have to guess that this is one of those issues that would not effect the individual consumer so much as processed food manufacturers and candy manufacturers that use tons (literally) of sugar.

I doubt the individual household buys more than 1 pound of sugar every month, if that.

Monkeytoe on March 13, 2013 at 8:11 AM

Why don’t we just make more rum?

EricW on March 13, 2013 at 8:12 AM

Wait……what?

tdarrington on March 13, 2013 at 8:55 AM

“drive prices up to prevent losses to sugar producers”?? And why are they suffering losses in a controlled, subsidized market? Somebody doing a little skimming here? And maybe some money floating around under tables, government money some of whch is kicked back to USDA employees? Government at work, It’s a beautiful thing.

arand on March 13, 2013 at 9:19 AM

Sugar tastes better and is better for you than corn syrup.

hawkdriver on March 13, 2013 at 4:22 AM

Amen. I love Pepsi Throwback!

And, yes, we need to get the government out of ALL subsidies in the marketplace!

GWB on March 13, 2013 at 10:35 AM

Okay. So the Government has proven that it purchases product on the open market to impact prices. Now follow this line of reasoning to the massive billion-round purchased of ammunition by the DHS. The goal being to soak up supply and tie up producers, preventing the general public from stocking-up until the laws limiting purchasing ammo can be passed. Viola! Market forces at work. Drive up the price, buy material that it doesn’t really need (hopefully), and implement your goal of maintaining higher than normal market pricing to achieve a political goal.
Dear Comrade: Keep you hands out of our (sugar, ammo, rifles, corn, etc.), thank you.

SphericMojo on March 13, 2013 at 11:38 AM

Sugar is more energy dense than corn for ethanol and using it won’t limit the supply of livestock feed driving up the price of just about everything from beef to cereal. So why exactly has corn been used instead of sugar?

John Deaux on March 12, 2013 at 11:42 PM

Cattlemen use what is left over after they make ethanol to feed their cattle. We mix it with ground hay (even wheat straw) to up the starch component to make up for what is taken out of the corn/milo to make the ethanol. The protein and fat content is still there, and cows eat the WDG and hay/straw combination like candy.

cptacek on March 13, 2013 at 12:23 PM

This sugar subsidy also leads to lost jobs. A lot of candy is now produced in Mexico since the sugar is much cheaper down there. An example how the current administration is continuing the practice of shipping jobs out of the country. Something they always accuse the other side of doing.

flstc on March 13, 2013 at 12:51 PM