Think Tanks Urge Ditching of Federal Sweet Tooth

Americans consume about 43 pounds of sugar products per year — and the federal government is paying for the feeding frenzy.

And now two Washington-based think tanks have joined forces to look at the government's agriculture subsidy program for sugar producers and say cutting the program would significantly reduce costs to the American public.

"We estimate the price tag that U.S. consumers have to pay extra is on the order of $2 billion," said Bob Hahn, director of the American Enterprise Institute-Brookings Institution Joint Center. The Joint Center recommends abolishing about a half dozen subsidy programs that they say would each save American taxpayers $100 million or more.

Currently, the U.S. sugar program provides loans to sugar farmers and controls the amount of low-cost foreign sugar imported into the United States so that the price of domestic sugar doesn't drop too low.

American sugar cane and sugar beet farmers say they need to be protected in order to compete with other countries that heavily subsidize their sugar farmers.

"We would be willing to go to free trade if you could get rid of the other unfair foreign trade practices that currently exist out there," said Luther Markwart, chairman of the American Sugar Alliance. According to the sugar industry, some of those unfair trade practices include using child labor to harvest sugar cane or substituting cheaper sugar to meet American trade quotas.

Sugar industry representatives say that the U.S. sugar program has rarely cost U.S. taxpayers any money because it is a loan program — not a subsidy. Sugar farmers pay back the loans with interest.

And, they add, even if the price of sugar does go down, that doesn't necessarily mean it will help consumers. Most sugar is sold for commercial use in everything from soft drinks to cereal and cookies.

"Most of the sugar is purchased by industrial users who simply keep those savings for their bottom line but don't pass it on to consumers," Markwart said.

But opponents of the program say the high cost of sugar is actually hurting American food manufacturers and forcing some to move their operations to other countries.

"It impacts local communities and real jobs of real people like the candy companies that are closing down and moving production to Canada," said Rep. Dan Miller, R-Fla. "In Canada, sugar is half the price as in the United States, so if you're a candy manufacturer in the United States, why don't you move your plants to Canada or Mexico or the Caribbean because sugar is half the price of the United States."

Hahn admits that American farmers who produce sugar would initially be hurt by abolishing the subsidy, but would recover and end up better off after a gradual switch to a free-market system.

"There's no denying they're going to take an economic hit, but what we are saying is overall, the economy as a whole will grow by $1 billion if you remove these effective subsidies," he said.

The sugar program is likely to come under fire later this year as Congress prepares to reauthorize an omnibus farm bill for the agriculture industry. But the government has been providing assistance to sugar farmers in one form or another for about 100 years, so abolishing the program may prove a difficult task for the members of Congress who want to get rid of it.

— Fox News' Sharon Kehnemui contributed to this report