Thursday, December 13, 2012

Sugar stuff, ctd...  

In answer to Troy who comments below:
"I understand her point and agree with it, but the numbers she is using are ridiculous.
She states that the sugar quota costs the U.S. $3 billion/year.
She then claims that each sugar farmer gains $3 million/year from the artificially inflated prices.
Using those numbers suggests that there are roughly 1,000 sugar farmers in America.
There are somewhere in the neighborhood of 10,000 sugar beet growers in the country not to mention all of the cane growers.
If one of her numbers is off by at least a factor of 10, it makes your question the validity of her other information. "
First, how many sugar producers are there?  Well, as usual we can only know numbers from the distant past, thanks to the split-century work of the USDA.
The number of farms growing sugarcane and sugar beets declined from 2002 to 2007, but the average area harvested per farm increased. According to the 2007 Census of Agriculture, the number of farms growing sugar beets and sugarcane decreased from 5,980 in 2002 to 4,714 in 2007. The number of farms growing sugar beets declined from 5,027 to 4,022, while average area harvested per farm rose from 272 to 312 acres. The number of sugarcane farms dropped from 953 to 692, while average area harvested grew from 1,027 to 1,224 acres per farm. [More]
As for the amount, the economist in the video isn't too far from other estimates.
U.S. sugar policy costs taxpayers millions of dimes per year. According to the U.S. International Trade Commission, the sugar program imposes a $49 million net cost on the economy.[9] According to a study commissioned by the Sweetener Users Association, the program costs consumers $2.9 billion to $3.5 billion.[10] According to a study by the American Enterprise Institute, the program costs consumers $2.4 billion per year, with a net economic cost of $1 billion per year.[11]
Sugar policy costs taxpayers by making them pay a little extra every time they buy a box of Lucky Charms, a Honey Bun, a package of Twizzlers, or anything else that contains sugar. [More]
So, doing some quick and dirty engineer math (we're trustworthy, remember?), if there are today, say, 3500 beet and 500 cane growers, and the program costs consumers $2.4B then the average benefit to a grower is $400,000. But cane constitutes 45% of the output with only 12% of the producers so their average returns would be markedly higher.

On the whole, I don't find her numbers way out of line, given the uncertainty of the numbers. But beet growers especially may feel it over estimates their benefits simply because of the lopsided distribution. I have read there are some really rich cane growers.

Finally, the argumentation method of using one questionable number as disqualifying the whole assertion is invalid, IMHO. Maybe one number unravels the whole chain of logic and maybe it has little effect.  Unless any number can be refuted with better information or logic, there is no contagion factor. I guess this is my takeaway from the climate change rancor.


Bill Harshaw said...

A difference in the figures might result from having "farmers" (i.e. individuals or entities) in one calculation and "farms" (i.e. complete operation with one or more "farmers") in another.

Troy said...


As Bill has pointed out above you are interchanging farms and farmers, but they are different numbers. For instance, our singular "farm" includes 4 "farmers". The information in the video discussed farmers.
The American Sugarbeet Growers Association claims to represent 10,000 family farmers. Their numbers may or may not be accurate, but there are without a doubt far more than 3,500 sugar beet growers that you used in you calculations.
Yesterday I took the time to contact Professor Thomas concerning the accuracy of the numbers in the video. She provided a link to an article written by James Bovard that was the source for the $3 million per year number she used. If you look at the Bovard article you will see that the $3 million is actually a cumulative number between 1980 and 1998, not a annual number as stated in the video. She told me she will contact the Learn Liberty people about posting a correction.

Having said all of this it doesn't change the point the video was making, but when one number is SOOOO inaccurate, it brings out my inner OCD. :)

John Phipps said...

Bill, Troy:

I don't think the census surveys "entities" like the FSA. Troy - did you fill our a form in 2007? Did your partenrs? Have you gotten a robocall yet (I did) about the 2012 Census? (BTW - you can do it online)

At the same time I don't think membership associations are good sources for farmer numbers as they tend to inflate numbers like a grouse in mating season. Case in point: Farm Bureau which counts urban insurance customers.

I'll stick with the ERS numbers since I haven't seen anything better. Call it the bronze standard.


Good on ya, mate for calling the prof. Jeez - how embarrassing was that for her? Also there was no indication of the accumulation in the numbers I found from the other sources. I should have been more skeptical. Come to think of it, can't the amount simply be calculated (roughly) by halving the domestic sugar costs for buyers?