Big Sugar Not So Sweet

Alfonso “Alfy” Fanjul, social friend and heavy contributor to Bill and Hilary Clinton and Marco Rubio.  Hundreds of thousands of dollars have bought the Fanjuls their way in the sugar industry.  Alfy was Bill’s campaign manager in Florida and the Clintons have been house guests at their mansion in Puerto Rico.

Dave Denslow writes about this in the Gainesville Sun, Sunday, August 7, 2016.   See his original article here.

Comments by OSFR historian Jim Tatum.
-A river is like a life:  once taken, it cannot be brought back-

Dave Denslow: Politicians hooked on Big Sugar

Friday

Posted Aug 5, 2016 at 2:00 PM Updated Aug 5, 2016 at 3:33 PM

Oval Office, Monday, Feb. 19, 1996: As President Bill Clinton was telling White House intern Monica Lewinsky that they had reached the end of the affair, the phone rang. It was Florida sugar baron Pepe Fanjul. Clinton talked with Pepe from 12:42 until 1:04 p.m. That’s right, 22 minutes.

To some people, that much presidential time would be worth a million dollars. It certainly was to Pepe. Earlier that day Al Gore had proposed a one-cent-per-pound tax on sugar produced in Florida to pay for cleaning up the Everglades. Gore even called it a “polluter’s tax” and Pepe was steaming. The proposal was quietly shelved.

Even more importantly to Pepe, members of the House of Representatives had the audacity to try to amend the 1996 farm bill to phase out the sugar program, which restricted imports and guaranteed domestic prices. Had Clinton supported the amendment, the sugar program would have ended, eliminating benefits worth $1.4 billion a year to the industry. But he did not and the change was narrowly defeated after six co-signers switched their votes.

Four years earlier, in 1992, Pepe’s brother Alfy served as co-chair of Bill’s Florida campaign. The close relation continues. In January 2015, Bill and Hillary relaxed at their friends’ Casa de Campo, a luxury estate in the Dominican Republic more than three times the size of the University of Florida’s main campus and with its own international airport and yacht club. The family and its companies have also been generous to Hillary’s campaign and PACs.

The Fanjuls do not discriminate against Republicans. Marco Rubio thanks Pepe profusely in his memoir, “An American Son,” for launching his Senate campaign against Charlie Crist. Pepe recognized Rubio’s potential while his support was still close to the single digits, or at least that’s what “An American Son” implies. Or maybe the Fanjuls hated Crist for proposing to buy 200,000 acres from U.S. Sugar, a Fanjul competitor, in what Pepe called a sweetheart deal.

In any event, Pepe and his family were well repaid by Rubio who, to the dismay of conservatives opposed to corporate welfare, twice voted as senator to retain the import quotas and price supports that enriched Big Sugar. (See … Rubio did sometimes vote.) Ending the sugar program, said Rubio, would place our sugar supply, crucial for our well-being, at the mercy of Brazil. After announcing his bid for the presidency, the first person Rubio embraced was Pepe Fanjul.

Donald Trump is getting his due. Pepe, who usually handles Republicans while Alfy takes care of Democrats, co-hosted a fund-raising dinner for The Donald. The food must have been out of this world. The charge per couple was $100,000. With his $10 billion net worth, however, Trump needs campaign donations from nobody and will not feel obliged to the Fanjuls.

What is this sugar program anyway, and why should you care about it? First, it’s complicated. That’s on purpose. The complexity makes it too opaque for us to bother understanding and hides it outside the federal budget. Simplifying, it has two main parts. The first is quotas restricting sugar imports into the United States. That keeps the price high. The second is that the U.S. government sets a price floor, technically a non-recourse loan program, that lets sugar producers avoid the risk of low prices. Domestic rights to produce are rationed to U.S. growers.

The Fanjul companies benefit from the high domestic sugar prices. Almost as much, they benefit from the quota allotments. The largest quota, 17 percent of the total, goes to the Dominican Republic, where sugar production is dominated by the Central Romana Corp. owned by — guess who — the Fanjuls. A large share of the Fanjuls’ billions comes from producing sugar at Dominican wages and selling it at U.S. prices. If we were to protect domestic sugar with tariffs instead of quotas, money that goes to the Fanjuls as profit would instead go the U.S. government as revenue. (Technically they are “tariff rate quotas,” purposefully opaque.)

How much does this sugar program hurt you? Not a lot. Maybe $40 a year for a family of four. But don’t the import quotas save U.S. jobs? No, by chasing confectionery producers to Canada and elsewhere, they cost us maybe 20,000 net. If these numbers are small, why do we care? Two reasons, both important. One is saving the Everglades and the other is character: Hillary, you’re tough. Show us you can stand up to Big Sugar.

— Dave Denslow is a retired University of Florida economics professor.