Sugar Can Turn Sour

March 21, 1960

For months Fidel Castro and his so-called government, in addition to waging a reign of terror at home, have been vilifying the United States, ostentatiously making deals with the Russians, seizing American property, and arresting American citizens. Our own government, in return, has not only restricted itself till now to a few perfunctory protests, but has continued to subsidize the Cuban economy.

The manner of this subsidy is complex. The United States assigns quotas to foreign suppliers of sugar. Omitting the special case of the Philippines, Cuba is allotted 96 percent of these foreign imports, and all other foreign countries together only 4 percent. With a quota of 3,120,000 tons this year, Cuba supplies a third of United States consumption, and receives a price of about 2 cents a pound above the world market. The differential is worth about $150 million to Cuba this year.

The actions and slanders of Castro and his lieutenants reveal how little gratitude or good will we have got in return. Major Guevara, president of Cuba’s National Bank, says that the premium the U.S. pays for Cuban sugar amounts to “economic enslavement.” Presumably the highly publicized deal that Cuba made to sell Soviet Russia some sugar at 2.78 cents a pound (about half the more than 5 cents paid by us and even below the world price of 3 cents) was a step toward economic liberation.

EMERGENCY POWERS

Our own next step ought to be clear. Congress should immediately empower the President (whether he asks for the power or not) to reduce or terminate the Cuban sugar quota at his discretion, to stop paying anything above the world price to Cuba, or to raise the (now preferential) duty on sugar imported from Cuba to whatever figure he considered appropriate. These discretionary powers might be granted, say, for a period of a year. They would not necessarily result in any change in the sugar situation. But armed with these discretionary bargaining powers the President and Secretary of State would be able to negotiate with Castro more realistically and flexibly concerning his slanders and his seizures of American property. They would be able promptly to retaliate against hostile actions or promptly to reward more friendly actions. This they cannot do under the present rigid fixed-term quantitative quota system.

Such a grant of temporary discretionary powers vis- à-vis Cuba ought to be kept separate from the question of what the permanent revision should be of the Sugar Act, which expires at the end of this year. So far as that act is concerned, what is required is not a readjustment of quotas but a complete reappraisal of policy. The present complicated quota system goes back to the Jones-Costigan Act of 1934, followed by the Sugar Acts of 1937 and 1948, and the amendments and extensions of 1952 and 1956.

COBWEB OF QUOTAS

There is hardly a pernicious economic or legal principle that is not embodied in these laws. The Secretary of Agriculture must determine each year the quantity of sugar “needed to meet the requirements of consumers.” He must divide the U.S. sugar market among domestic and foreign supplying areas by the use of quotas. He must allot these quotas among individual domestic producers. He must levy a tax on the processing of sugar cane and sugar beets and use the proceeds to make payments to producers to compensate them for adjusting production to marketing quotas. He must prescribe an “equitable” division of sugar returns among processors, growers, and farm workers.

The result is an economic regimentation and complicated nightmare of controls unparalleled even in the rest of our farm program. It involves rigid and discriminatory treatment of all foreign exporting nations, tends to breed resentment in all except the most favored, Cuba and is now treated scornfully in Cuba itself. This is a heavy price to pay to subsidize a combined domestic beet and cane production equal to only about one fourth, and a domestic cane production equal to only about one-fifteenth, of our total sugar consumption.

It is high time to start extricating ourselves from the whole fantastic sugar quota program.