Bankrupt Nation Full Of Fatties Considering Bailout For Big Sugar

Sure. Why not.

The U.S. Department of Agriculture is considering buying 400,000 tons of sugar—enough for 142 billion Hershey’s HSY +0.08% Kisses—to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program.

The action aims to prop up tumbling U.S. sugar prices, which have fallen 18% since the USDA made the nine-month operations-financing loans beginning in October. The purchases could leave the price-support program with an $80 million loss, its biggest in 13 years, said Barbara Fecso, an economist at the USDA, in an interview.

The move would benefit companies that turn sugar beets and sugar cane into granulated sweetener, a business plied by American Crystal Sugar Co., Amalgamated Sugar Co. and U.S. Sugar Corp. The USDA wouldn’t say how many companies have received loans, or identify them. U.S. Sugar said it doesn’t have any USDA loans outstanding. American Crystal and Amalgamated didn’t respond to requests for comment.

Higher prices would hit food companies including candy giants Mars Inc., Hershey Co. and Nestlé SA, NESN.VX +0.67% and could ultimately boost retail food prices, at a time when many consumers are financially stretched.

It’s worth remembering that the sugar markets in America are government-controlled. Not only is the market protected from competition with foreign sugar producers by tariffs, but the government also caps the amount of sugar that can be produced in order to keep prices elevated.

And, surprise, these government controls have resulted in an unstable and collapsing market. Even less surprising is that the solution for this problem caused by big government is another government bailout.

Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and host of the Plain Talk Podcast which you can subscribe to by clicking here.

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