Thursday, 06.26.08
A Not-So-Sweet Environmental Victory
Photo by flickr user deckchair under a creative commons license
Do We Consume Too Much?
June 1997
The Democrats' Best Shot At Reform
9 January 2007
Jonathan Rauch looks at the Democrats' missed opportunity to end farm welfare as we know it.
Environmentalists are swooning over the agreement, which could restart the natural flow of water from Lake Okeechobee to Florida Bay. But don't break out your plastic pink flamingos just yet. The deal smells worse than the stinkiest of the sulfate-contaminated wetlands it's supposed to revive, continuing one of the longest-running rip-offs in the history of the republic.
Under the proposed agreement, Florida will pay U.S. Sugar Corp. $350 per share for its land and facilities. That's about 20 percent more than the $293-per-share private offer U.S. Sugar received three years ago. More damningly, it is well above the highest "fair market value" price of $204 per share that the trustee of the company's Employee Stock Ownership Plan was offering workers who retired. Republican Governor Charlie Crist, who engineered the deal, wasn't particularly eager to talk about how the state came up with the $1.7 billion valuation. Doubtless the $30,000 that U.S. Sugar and its subsidiaries chipped in for his inauguration, and the $600,000 that it and other sugar companies gave to his campaign, had nothing to do with his calculations.
Let's ignore, for the moment, the absurdity of Florida's paying a premium price to a company that has done hundreds of millions, if not billions, of dollars in damage to the state's most precious natural resource, draining swaths of the Everglades and polluting the rest with fertilizer runoff.
Instead, let's get in touch with our inner libertarians and fulminate about this deal's biggest outrage: it rewards a company that has been gouging American taxpayers and consumers for the better part of a century. In 1937, for example, only six years after U.S. Sugar Corp.'s creation by General Motors tycoon Charles Stewart Mott (obligatory Web tangent: his son, the frisky philanthropist Stewart Mott, just died), the company was already getting a $430,420 government subsidy, or about $6.4 million in today's dollars. Now, as the country's biggest cane-sugar producer, the company enjoys annual subsidies worth tens of millions.
The U.S. sugar industry as a whole has been fattening itself at the taxpayers' expense since the War of 1812. In a 2000 study, the Government Accountability Office estimated that the various sugar quotas, tariffs, and price supports cost American consumers about $1.9 billion a year. Thanks to these policies, we pay considerably more than the world market price for sugar. We lose more jobs than we gain. (In fact, the Commerce Department reported that for every job saved in the sugar industry, three are lost in the confectionery industry.) And we punish poor countries that grow the stuff more cheaply by blocking their exports, then bitch about the billions in foreign aid we send them each year. Meanwhile, our elected representatives are so busy diving for sugar cubes ($2.7 million worth of congressional campaign contributions in 2006, mostly to Democrats) that when the Farm Bill recently passed, it included increases in the support price for sugar. Ain't that sweet?
The price of protectionismIn the National Wetlands Newsletter, Aaron Schwabach details the history of federal protectionism in the sugar industry and its cost to the Everglades. |
The maverickThe Independent explains why restoring the Everglades has become an issue in the presidential campaign. |
Worst practicesThe National Review untangles the complexities of the government's sugar policy, which it calls "one of the most egregiously harmful government programs." |
Golden parachuteThe Miami Herald argues that Florida's buy-out plan gives U.S. Sugar too sweet a deal. |
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The purchase price is 20% more than an offer U.S. Sugar rejected. Exactly what's the reason for thinking this isn't just the price at which U.S. Sugar was actually willing to sell? Whether the benefit to Florida is worth the cost is a different question (environmentalists seem to think so), but you don't offer the slightest basis for your suggestion that this was a corrupt give-away by Christ.
I agree with the two previous comments-- while Gibney is outraged that Big Sugar has been sucking off the public teat for so long, as am I, his denunciation of this deal is non-sensical or at least unsubstantiated. Florida buys the land and then US Sugar isn't using the land. "Our most precious natural resource" gets a chance. Whether the price is fair is another question, but $9000/acre doesn't sound out of the ballpark. An ESOP valuation doesn't add the premium for buying all of US Sugar.
This is an excellent article. I hope that you all understand that we must make ethonal from suger because it is cheeper to make than corn. The amount of land involved is necessary to cultivate sugar cane now. If you all do not start understanding that Florida must be turned into a massive sugar cane plantation now, you surely have not gone to the gas station lately. As far as any governor accepting a bribe in the clothes of a campaign donation, any citizen may go to federal court and charge him under General Order 34, (Civil Rico). Its time for you all to grow up. Just because a person is elected, does not mean that they are not subject to the law. The only person, unfortunitely who is above the law is a President. It is time also that Journalists got off their good intentions and used the courts to enforce the law to protect the citizen against low class political opportunists who act as if their election was a signal to steal and not be part of a nation. Go to Federal Court on this one NOW
So what's your alternative for ending the pollution and restoring the hydrology of the Everglades? What's your solution? The sugar subsidies aren't going to end. And the multi-billion dollar "replumbing" of the Everglades is years behind schedule and ineffective anyway, since it allows the sugar industry to continue to pollute.
This deal has one enormous upside--it breaks the status quo. Yes, the taxpayers are out more money, but a big part of the sugar industry is finally out of South Florida, and the land in question is protected from development. In other words, there's real hope for restoring the water flows at last.
Posted by Claudius | June 26, 2008 11:55 AM