He’s oversimplifying again. The Federal Sugar Program is a complex system that aims to maintain domestic sugar prices above global market levels. Potential impacts of repealing it include loss of price supports – meaning that sugar producers (both sugar beet and sugarcane farmers) would be exposed to lower global market prices, which are often more volatile and lower than U.S. prices. This could result in significant financial difficulties, with smaller or less efficient farms at risk of going out of business, which could lead to reduced domestic sugar production.
Without the import quotas and tariffs, cheaper sugar from countries like Brazil, Mexico, and Thailand could flood the U.S. market, putting further pressure on domestic producers. I suspect this is another example of “Republicans not properly understanding tariffs.” Increased reliance on imported sugar could negatively affect domestic employment in the sugar industry, particularly in states like Florida, Louisiana, and Minnesota, where sugar production is significant.
U.S. food manufacturers would benefit, since they would no longer have to buy domestic sugar and could get it cheaper at the global market price. If the price of sugar decreased, food manufacturers may drop prices, which would benefit U.S. consumers if that were indeed the result. Removal of the pricing supports leaves us open to global market volatilty, potentially resulting in unpredictable sugar prices, which translates to unpredictable manufacturing prices and therefore unpredictable and fluctating consumer costs.
On the other hand, if domestic sugar production declines due to the removal of price supports, it could lead to environmental benefits, especially where sugarcane production is water- and chemical-intensive, such as the Florida Everglades (where sugarcane farming has been linked to water pollution.) (Although I’m sure that environmental harm reduction isn’t something that Bakst wants or cares about.)
Full contextual analysis of Section 3.1: Department of Agriculture here.