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ANALYSIS: The Sugar Industry’s Bitter Reality

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   July 24th, 2012 · 8 Disqus Comments ·
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By Nate Gaddis

Sugar cane harvesting. File photo.

For native Hawaiians, the sugar industry holds bitter memories.

In 1890, shortly before the death of King Kalakaua, the US congress enacted the McKinley Tariff, ending the “most favored” status of Hawaiian-grown sugar and rewarding American producers with a 2 cent per pound bounty on their crops.

The value of Hawaiian exports to the US mainland quickly plummeted, dropping from $13 million to $8 million ($312 million to  $192 million in today’s money) within two years.

After succeeding her late brother, Queen Lili`uokalani began drafting a new constitution for the islands, intent on restoring power to the Hawaiian monarchy. The 1893 constitution would have limited the political clout of European and American business interests, many of whom were already eager to see Hawaii annexed to the United States. Annexation meant better sugar prices, and the support of the business community helped to fuel the overthrow of the Hawaiian kingdom.

Queen_Liliuokalani_at_Iolani_Palace_in_Honolulu

Portrait of Queen Lili`uokalani, whose government was overthrown with the support of sugar producers. Image file from Wikimedia Commons.

The McKinley Tariff that helped hasten the end of the monarchy became obsolete roughly a year later, but sugar producers would continue to influence domestic politics through the following century, right up to the present day.

In June of this year, the US Senate rejected an amendment that would have phased out the federal government’s protections for sugar producers. A few weeks later, the House of Representatives rejected a similar measure.

Unlike many crop subsidies that send farmers payments, the US government keeps prices high for domestic sugar producers mainly by limiting foreign imports. The quotas have a direct impact on US consumers, who pay (averaged over 10 years) roughly twice the price of sugar than can be found on the open market.

The artificially elevated prices also raise the cost of doing business for food producers, pushing some to outsource their operations outside of the United States. The policy also has had a major impact on the beverage industry, where domestic soda makers have turned to high fructose corn syrup (often deemed a less healthy alternative to cane sugar) to sweeten their beverages.

With nearly all of Hawaii’s sugar plantations now closed, the Hawaiian Commercial and Sugar Company (HC&S), operating mainly here on Maui, remains one of the sole local beneficiaries of the current US sugar policy, employing nearly 800 people and producing approximately 200,000 tons of cane sugar each year.

US Senator Daniel K. Inouye, on a Maui visit. File photo courtesy: UHMC, Dan Kruse.

US Senator Daniel Inouye, whose grandparents emigrated from Japan to work in the Hawaiian sugar industry, came out strongly opposed to reforming US sugar policy, remarking to his fellow lawmakers “Hawaii’s existing sugar producer could potentially close, forcing my constituents to lose their livelihood,” and going on to predict that “If the US sugar policy were eliminated… the US market would collapse.”

All of this is certainly possible. But what exactly is it costing us to maintain the status quo? The United States General Accounting Office in 2000 found that in the current scheme, the estimated annual cost per job saved in the United States sugar industry is $826,000.*

The US International Trade Administration in 2011 framed the problem in similarly stark terms: for every job in sugar harvesting saved, three jobs in the confection industry are sacrificed. Other studies have shown that 42% of sugar program benefits go to an estimated 1% of sugar growers.

The bittersweet history of Hawaii’s sugar industry may be entering its final chapter. HC&S is the sole major producer left in the islands, surviving in part due to government policies. With the USA facing an increasingly difficult budget situation, pressure is mounting on legislators to cut subsidy programs. With the Senate narrowly preserving sugar industry protections this year (by a 50-46 vote margin), time may be running out for those dependent on the jobs and benefits it provides.

* Cost calculated via cost to consumers and commercial users, inflated by mainly the sugar quota

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  • mike

    With the USA facing an increasingly difficult budget situation, pressure is mounting on legislators to cut subsidy programs”subsidies” are a euphemism for “corporate welfare”………………While I don’t necessarily object to  subsidies I do have a problem with not,  [to quote Cosell], “tellin’ it like it is”……….

  • Lord Haw-Haw.

    Thrice the Senate over in the U.S. rejected ratifying a Treaty of Annexation to this day there exists no such ratified Treaty. The bittersweet history of U.S. Government/Nation of Hawai’i Government legacy will enter it’s final chapter when the U.S. Government de-occupies and dissolves the fake entity known as the “State” of Hawai’i.

  • Kenike Kope

    Just a straightforward comment from a haole who got married at Makena Cove with Lana’i and Kahoolawe visible as we stood on blessed kapa, drank awa, and were pronounced kane and wahine by a traditional Kahuna in an ancient ceremony. I only buy “sugar in the raw” made in Maui. Aloha.

    • wakeuppleasemahalo

      This allegiance to Sugar, is the same mindset that oversaw the deforestation of Kaho’olawe’s Sandalwood forest: the few benefit while the people, future generations, and the land suffer. So unless you’re part of the A&B alii, you should probably rethink the morality of your made in Maui position.

      • bornandraised

        I would rather keep my alligiance to sugar,  then have an unknown come in and make concrete buildings and parking lots in place of the sugar fields.  You say Kaho’olawe suffered, at least it’s still an Island with no concrete and the people of Hawaii is making an effort to put life into it again.  That Island could be used to make life better here on Maui.  The corporations should get with the people of Hawaii and ask to put the solar panels and wind farms on Kaho’olawe.  Now the people of Hawaii get paid and the corporations can bypass Maui Electric.  MECO says that they can’t use all the power from the solar and wind farms because they don’t have the tecnology for it.  Well here is a way a new company can take control using the sun and wind.  Start from the ground up.  Now big question, is there a corporation willing to work with the people of Hawaii intsead of screwing them???????

        Now you say what a stupid idea.  The Island going to end up all concrete and stuff.  My understanding is that the windmills before the new ones were put up, was run by 3 people and if you look the roads are gravel not paved and they have a contract with the Island that they will do as little damage to the land as possible and pay for any damages done by them or the windmills.  The land and plants around the windmills are taken care of by people of Hawaii. 

        Just a thought.

  • SugarDaddy

    Many more jobs would be created when other crops are grown on their land and solar & wind power utilized.

  • http://pulse.yahoo.com/_PAINGM55CRPYTBXSYCHCNV7LGQ StarGazer

    While I respect Senator Inouye, if 42% of the benefits go to 1% of the growers, the program is NOT supporting the industry, it is supporting 1 or 2 companies.  Also, the cost, $826,000/job saved is outrageous.  We could pay each sugar industry worker the $826,000 and tell them they have 10 years to figure out a new career.  I’m sure that $82,600/year would be a large increase form most of them.

    This program needs to be ended as it has become corporate welfare for 1 or 2 companies.

    I was on Kauai this summer, and the locals I spoke with seemed pleased with the increased coffee production and seed crops that were going in on the old sugarcane fields.

    Seren
    St. Louis 

  • Steve Mains

    Out sourcing all our food supply is a great idea, now we can have all the hostess cupcake even cheaper.
    Next we can outsource the news reporting to India, think how much money that will save us poor consumers :)


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