Uncle Sam is Your Sugar Daddy: How Sugar Policy Contributed to the Rise in Diabetes
The Butterfly Effect, attributed to meteorologist Edward Lorenz, is the idea that small actions in one part of the world can have significant effects elsewhere — a butterfly flapping its wings in California causes a tornado in Oklahoma. Weather is not the only place we find butterfly effects; they happen in government policy regularly, a policy often has many unforeseen and unanticipated effects. Federal sugar policy is one example.
A Brief History of Sugar in the United States
The history of sugar in the U.S. is very interesting. While it seems that recipes for the Southern staple, sweet tea, did not appear in cookbooks until the 19th century, some speculate that sweet tea has its origins as a stratagem to avoid (via smuggling) the British Molasses Act imposed on the colonies in 1733. Those details may be lost to history, but the Molasses Act expired in 1763 and was replaced with the Sugar Act in 1764. There was such resistance to the Sugar Act that the Revenue Act replaced it two years later. All of these were policies dealing with sugar.
A few years later, one of the first taxes the new United States imposed in 1789 was a tariff on imported sugar — a policy that has been largely maintained to this day.[1] Space limitations prohibit a full policy history discussion, but the table below provides a summary of the relevant legislation and programs:
Sugar Related Legislation in the United States
| Year | Program | Effect |
| 1934 | Jones-Costigan Act | Imposed tariffs and quotas on imported sugar and provided subsidies to U.S. sugar producers |
| 1937 | Sugar Act | Re-written version of Jones-Costigan after the Supreme Court declared Jones-Costigan unconstitutional in 1936 |
| 1948 | Sugar Act | A renewal/continuation of the 1937 Act |
| 1974 | 1948 Sugar Act expires | Sugar prices fall, so government establishes a special loan program for sugar producers in the Dept. of Agriculture |
| 1981 | Agriculture and Food Act | After several years of no official legislation and ad hoc loan programs, the sugar price-support program is included in the Agriculture and Food Act (a.k.a. the 1981 Farm Bill) |
Modern Policy and Its Effects
The 1981 legislation has been renewed and continued and is still U.S. sugar policy. It includes tariffs, subsidies, and mandates requiring purchases of domestically grown sugar. It is a web of interlocking policies that benefits an industry with 11,000 producers and less than 150,000 employees.[2] What is the consequence? A pound of sugar in the U.S. is 15-20 cents more expensive than the world price.[3] Given 2023 production levels of 8.1 million metric tons[4] and assuming a 15 cent per pound price premium, that equates to $2.67 billion a year — more than $240,000 extra for each producer annually.
But industrial sugar users do not just accept high prices. The average consumer may not notice a 15-cent price difference and have a pretty inelastic demand, so they just pay it. The average American consumes 80 pounds of sugar a year[5], which seems like quite a bit, but it only totals $12 in price premium — or less than 25 cents a week. But producers of food products in which sugar is an input, buy thousands of pounds a year and have an incentive to find substitutes. Enter: high-fructose corn syrup.
High Fructose Corn Syrup (HFCS)
There are different kinds of HFCS used in different products, and end consumers only buy HFCS as a component of another food product. But it is found in many products, and the average American consumes more than 60 pounds of it a year — without ever deliberately buying an ounce.[6] This is a product that did not even exist (as a food component) in 1970. According to the Bureau of Labor Statistics, the current price for a pound of sugar in the U.S. is around a dollar[7], and a pound of HFCS is about 50 cents.[8] It is easy to understand why large purchasers would make a switch.
Health Implications
However, HFCS is a more complex sugar than cane or beet sugar, and the human body is less efficient digesting it. That leads to a build-up of fructose in the body, which correlates with certain health issues, including obesity, fatty liver disease, and Type II Diabetes. There are, of course, many factors when considering health outcomes, and we want to be careful not to mistake correlation with causation. Diabetes was slightly on the rise before HFCS became prominent, and the good news is there has been some improvement in the past few years. But when we think of the timeline of HFCS development and adoption in the mid-1970s and the 1981 Farm Bill increasing U.S. cane and beet sugar prices and then look at the significant increase in diabetes cases (especially for those 44 years of age and older) since the late 1980’s (as the chart below shows), we should think about policy butterfly effects. They are real and can be significant.
Percentage of U.S. Population with Diagnosed Diabetes, 1980–2014 [9]
Source: CDC, 2015.
[1] https://www.cato.org/policy-analysis/candy-coated-cartel-time-kill-us-sugar-program#an-overview-of-u-s-sugar-policy
[2] https://www.sugar.org/about/us-industry/
[3] https://southernagtoday.org/2024/05/20/analyzing-world-and-u-s-sugar-price-dynamics/
[4] https://www.sugar.org/about/us-industry/
[5] https://nypost.com/2024/10/22/lifestyle/americans-consume-nearly-80-pounds-of-sugar-a-year-survey/
[6] https://healthfully.com/list-high-fructose-corn-syrup-5851584.html
[7] https://fred.stlouisfed.org/series/APU0000715211
[8] https://estore.icifoods.com/high-fructose-corn-syrup-42-3000-lb-tote-42hft275
[9] https://www.atrainceu.com/content/2-scope-diabetes
