Summary: The U.S. Department of Agriculture's (USDA) sugar program protects domestic sugar producers from lower world prices but has boosted domestic sugar prices, costing food manufacturers and consumers an average of $1.4 billion annually. About 40 percent of this amount goes to producers. Yet program benefits are concentrated among a relatively small percentage of farms. GAO estimates that 42 percent of the sugar grower benefits went to one percent of all sugar farms in 1991. Although cane and beet sugar each represent about one-half of the domestic sugar market, the cane industry's benefits are more concentrated--17 cane farms received about 58 percent of the estimated cane grower benefits in 1991. Benefits for high fructose corn syrup manufacturers, which average $548 million annually, are also concentrated: Four firms accounted for 87 percent of production in 1990. Foreign countries that export their quota sugar to the United States receive the supported domestic price, which is higher than the price these countries could receive on the world market. GAO recommends that Congress consider legislation that would move the sugar industry toward a more open market. As part of this transition, the market price for sugar should be lowered. Congress should gradually lower the loan rate for sugar and direct USDA to adjust import quotas accordingly.
