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InsiderOnline Blog: December 2012

One Little Noted Reason Twinkie Production Is Moving to Mexico

Protectionism. Bryan Riley:

According to the U.S. Department of Agriculture’s Economic Research Service, “U.S. sugar prices have been well above world prices since 1982 because the U.S. Government supports domestic sugar prices through loans to sugar processors and a marketing allotment program.”

The U.S. government artificially inflates sugar prices to help sugar growers by imposing quotas that restrict the amount food manufacturers and consumers in the United States can buy from producers in other countries. If a bakery or a candy company wants to import more sugar than is allowed under the government’s quota, it must pay a prohibitive tariff of 15.36 cents per pound for raw sugar.

In October, sugar cost 52.54 cents per pound in the United States and 44.78 cents per pound in other countries. The difference between 52.54 cents and 44.78 cents is not “zero.”

In October, people in the United States paid 7.76 cents per pound extra for sugar, but the “no-cost” sugar program usually costs Americans even more. Over the past 12 months, Americans paid a big surcharge for sugar. The average price of sugar in the United States was 68.95 cents per pound, 41 percent above the world market price. [Internal citations omitted.] [The Heritage Foundation, December 5]

Posted on 12/07/12 12:19 PM by Alex Adrianson

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