The Monstrous Driver of Higher Halloween Candy Prices

Gabriella Beaumont-SmithThe last two Halloweens looked very different amidst the COVID-19 pandemic as people wore very different types of masks. Unfortunately, this Halloween will continue to be filled with more tricks as candy prices are up13.1 percent since September last year —Hershey and Nestlereported raising prices 14 percent and 6.5 percent, respectively.While inflation is haunting many food products, candyflation could be lower if the U.S. government did not cartelize sugar. The United States Department of Agriculture (USDA) provides a  sugar program to purposefully keep the price of sugar high. Figure 1 illustrates the stark difference in the U.S. the price for sugar and the world price. In August, the U.S. sugar price was 35.48 cents per pound compared to 18.06 cents per pound at the world price.To implement the supply restrictions (and incentivize loan repayment), the USDA determines an annual limit on how much sugar can be sold domestically, reserving85 percent of the U.S. sugar market to domestic producers (divided among sugarcane and sugar beet producers), and by buying U.S. sugar to keep it off the consumer market (most often selling it to U.S. ethanol producers at a  hugeloss).The last mechanism the government uses to restrict supply is the imposition of strict tariff ‐​rate quotas on imports of sugar—very low quantities can be imported duty‐​free but any excess is subject to an exorbitant tariff that reaches close to 100 percent!These tools hel...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs