Washington, DC — A story breaking this week from Bloomberg Politics details the political influence of the most powerful family in the sugar industry, the Fanjuls. The report focuses on the family’s massive wealth, formed on the backs of hardworking taxpayers, and how they have used that wealth to curry favor to insulate the U.S. sugar program from much needed reform. The Bloomberg report uncovers the worst forms of crony capitalism by digging into the background of the Fanjul family, and providing insight on why reforming the sugar program is an important element of job creation for U.S. companies that use sugar as an ingredient in their products.
Noting the family arrived in the U.S. in 1960 from Cuba, where Patriarch Alfonso Fanjul Sr., one of the world’s most prosperous sugar barons before Castro came onto the scene, had piled up assets. Within two years, the news source reports, he had acquired refining plants and begun to recreate the company empire on American soil.
His two oldest sons are now in charge of the business, and among the most effective political donors in the country, Bloomberg reports, claiming they have the Trump administration’s ear as it aims to rewrite the North American Free Trade Agreement (NAFTA).
The family’s wealth, according to the Bloomberg Billionaires Index, is estimated at $8.2 billion, with the eldest son, known as Alfy, and Jose, 73, nicknamed Pepe, controling the family wealth and industry giant Florida Crystal Corp., and according to a Bloomberg analysis.
The report notes the brothers have donated so much to politicians that it could be that “sugar, dollar for dollar, is the most influential commodity in the U.S.,” said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics and former deputy assistant secretary in the Treasury Department. “I would fall out of my chair at any approach that leads to a free market in sugar” as long as the brothers are alive, he added.
While the family did not talk to Bloomberg for the article, in 2011 in a rare interview Alfy was quoted in Vanity Fair explaining: “One of the reasons why we get involved in American politics is because of what happened to us in Cuba. We do not want what happened in Cuba to happen to us again.”
According to the Center for Responsive Politics, Alfy, a Democrat and Florida Crystals’ chairman and CEO, has given $1.3 million to the party since 1989. Pepe, a Republican and the company’s vice-chairman and president, has donated about the same to the GOP. During the 2016 election cycle, the brothers and their company contributed some $2.6 million to Democrats and Republicans, pretty much evenly divided, the report states.
Bloomberg quotes Carl Hiaasen, a novelist and columnist at the Miami Herald: “They give money to everybody who has got a shot. They’ll give more money to people they like, but they’re too smart not to give money to everybody.”
Hiaasen is a critic of the U.S. sugar industry, noting it is a beneficiary of “corporate welfare.” The current sugar policy is held up by a quota system that restricts imports to give producers some 85 percent of U.S. sales, and by a federal loan program that, basically, puts a floor under prices, the Bloomberg post states.
Prices are so inflated consumers are spending $2.9 billion a year that they shouldn’t have to, said Tom Earley, an economist with the consulting company Agralytica who has lobbied against sugar protections. Bryan Riley, a senior policy analyst at the conservative The Heritage Foundation, said Americans have paid almost $50 billion in distended prices since 2000 — “all to benefit one politically connected interest group.”
The American Sugar Alliance maintains the current sugar program is necessary to save jobs and safeguard against foreign dumping. “Critics of U.S. sugar policy often like to confuse the issue of price to score political points,” said Phillip Hayes, director of communications for the trade group, in an email to Bloomberg.
Among the world’s sugar refiners, the Fanjuls are at the top, according to Sergey Gudoshnikov, senior economist at the International Sugar Organization. The company had $4.3 billion in revenue in 2015, according to the South Florida Business Journal.
Recently, the Fanjuls’ lobbying focus has been NAFTA. The plan, when it was signed in 1992, was for Mexican sugar sales to the U.S. to be liberalized by 2008, but the Fanjuls and other producers and refiners successfully challenged that in anti-dumping complaints to the Commerce Department. That “is a pretty good sign of their power and influence,” said Kimberly Ann Elliott, a visiting fellow at the Center for Global Development.
In another victory, the two countries recently closed a loophole Mexican producers had exploited by refining sugar just enough to be considered raw but sufficiently processed to sell to consumers. Mexico agreed to restrictions on refined sugar sales to the U.S. and a new definition of raw sugar that gives U.S. processors an advantage by lowering the quality of what can be considered refined.
Bloomberg reports President Donald Trump was not Pepe’s first choice for the nation’s top office, noting he was instrumental in Florida Republican Marco Rubio’s rise to the U.S. Senate. But Pepe served on the host committee for a Trump campaign event in July 2016 at the West Palm Beach home of Wilbur Ross — a social friend of the Fanjuls who, as Trump’s commerce secretary, is helping direct NAFTA talks.
Ross and his wife are frequent guests at the Fanjul’s luxury resort in the Dominican Republic, the news report states. Other political figures who have vacationed there include three former presidents — George H.W. Bush, George W. Bush and Bill Clinton, and Hillary Clinton, according to Bloomberg. CST