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Sweet deal for U.S. sugar farmers

NBC NIGHTLY NEWS - By Correspondent Lisa Myers

06-16-00: WASHINGTON, D.C. (NBC NEWS)   —  Many consumers have heard reports about price supports for sugar producers in this country — consumers paying what amounts to a hidden tax. Now, according to a new report from the General Accounting Office, what some already consider an outrageous fleecing of America is about to get even worse.

What critics claim is already a sweet deal is getting even sweeter for sugar beet farmers like Craig Halsmann. The government is using $70 million in tax dollars to buy 150,000 tons of sugar — enough to lay five-pound bags end to end from New York to Los Angeles three times over.

Why? To prop up sugar prices. “We’re in a crisis situation,” Halsmann said. “We’re just asking the USDA to help us out as farmers because our prices are so terrible. We need to keep our family farmers on the farm.”

But critics say it’s ridiculous — and a honey of a deal — because those taxpayer dollars are in addition to the inflated prices the public already pays for sugar and don’t even know it.

"This is one of the most serious outrages on the agricultural side," said Sen. Richard Lugar, R-Ind. "Clearly, consumers have never understood that they’re paying a tax every time they get a pound of sugar."

And also every time they buy a candy bar or cereal or even a canned ham. It’s all because of the sugar program. Here’s how it works: The government uses import restrictions and price supports to drive up sugar prices. Today, the world price of sugar is about eight cents per pound. But U.S. growers get about 22 cents.

And it all shows up in what you pay. Experts estimate a family of four spends an extra $26 a year on sugar because of the program. This government report says that works out to almost $2 billion — straight from taxpayer pockets to sugar producers.

SUPPORTERS DISPUTE FIGURE

Supporters of the program insist it doesn’t cost that much and say struggling farmers need even more help this year since bumper sugar crops drove down prices.

"All the government has done is to come in and buy some of the surplus sugar," said Jack Roney of the American Sugar Alliance. "The government is holding that sugar; they will sell it eventually, possibly even at a profit."

In fact, the Agriculture Department claims that buying excess sugar now may save taxpayer money, because if prices stay below what growers are guaranteed, another sweet part of the sugar program lets them dump their crop on the federal government at a much bigger cost to taxpayers.

"Well, who benefits from the purchase, I think, is the taxpayer," said Keith Collins, the USDA’s chief economist.

"We think that actually saves us some money and at the same time, supports prices a little bit now."

That’s not so, say consumer advocates. "The program gives too little money to the farmers who need the help and too much money to farmers who don’t need the help," said Art Jaeger of the Consumer Federation of America. "And it asks consumers to foot the bill."

In fact, the biggest winners of all, critics say, are the biggest sugar daddies of all — Pepe and his brother Alphonso Fanjul, of Palm Beach, Fla. Politically connected, they’ve given $1.8 million to both Democratic and Republican parties over four years. According to one study, they earn about $65 million a year from the program.

"Any time you ask consumers to pay $1.5 to $2 billion a year more for food, and the beneficiaries are largely wealthy sugarcane growers in south Florida, I think that’s a fleecing of America," Jaeger said.

For consumers, it may be bittersweet.