WASHINGTON, April 16, 2014 - This Easter is expected to inspire record seasonal candy sales, but the news is looked at in much different ways by the confectioners who make the treats and the sugar industry which provides key ingredients. Neither would suggest that there is anything wrong with buying a few more chocolate bunnies, malted eggs or those wonderful jelly beans this week, but the cost of sweeteners and continuation of U.S. sugar policy in the new farm bill, is still the subject of an ongoing policy battle.
The National Confectioners Association (NCA), which includes Mars Inc. and the Hershey Co. among its members, expects $2.26 billion in U.S. candy sales this Easter season, up 4 percent from last year. Easter, celebrated on April 20 this year, is the second biggest holiday for candy sales, trailing only Halloween.
NCA conducted a nationwide survey that indicates 87 percent of parents plan to give Easter baskets to their children and almost 83 percent of moms and dads will include candy and chocolate in those baskets. Jelly beans will likely be part of the haul, as more than 16 billion of the tiny delights are made for Easter each year in the U.S.
“Candy has a special place in American culture,” NCA Executive Vice President Alison Bodor noted in what is surely an understatement for anyone with a sweet tooth.
This is good news for the candy industry. But sugar producers, represented by the American Sugar Alliance (ASA), want to make sure lawmakers know that the confectioners are doing quite well, thank you, and haven’t been hurt by government sugar polices. This month ASA unveiled a website devoted to tracking positive financial news and stories of expansions in the candy business.
“For years, it’s been difficult for lawmakers to learn about confectioners’ economic success,” notes the “Big Candy’s Big News” website. “That’s because candy lobbyists are too busy telling Congress that (government) sugar policy has caused them financial harm.”
According to ASA, the ten largest publicly held sugar-using companies saw share prices quadruple from 2000 to 2012.
Spokesman Phillip Hayes said ASA posted the site because, “Confectioners of all sizes go up to Capitol Hill and talk about the financial pain being done to them because of U.S. sugar policy.” But, says Hayes, “that’s simply not the case.”
ASA this week released a chart that shows the cost of a 44 gram Hershey chocolate bar going from 35 cents to $1.39 over the past three decades, while the sugar content in the bar held steady at between 1 cent and 3 cents.
“When candy companies do well, sugar farmers do well,” Hayes said, emphasizing that sugar producers want candy companies to be as successful as possible. “What is unfortunate is they don’t seem to cheer our success.”
“Confectioners will find any opportunity to tear down sugar policy,” Hayes said.
Confectioners are indeed critical of current U.S. sugar policy, which they say inflates the price of the sweetener by limiting supply. The sugar program guarantees the price received by growers and processors and is intended to operate at “no cost” to the U.S. Treasury. USDA controls supply by limiting the amount of sugar that processors can sell domestically under “marketing allotments” and restricts imports.
The 2014 Farm Bill maintained the program, disappointing sugar reform advocates.
“[The policy] creates a competitive advantage for foreign candy companies who pay much lower world sugar prices and import their candies into the U.S. market,” according to NCA. “For smaller U.S. candy companies, the tight market created by these policies can threaten availability of supply regardless of price, putting U.S. jobs at serious risk.”
Susan Smith, a spokesperson for NCA, said ASA’s website is “a diversionary tactic” to distract from sugar policy.
“A handful of sugar processors score a huge benefit in taxpayer dollars as a result of the supply management scheme that is the U.S. sugar program,” she said. “The fact is, the federal government's sugar program is preventing job growth in towns across the country where candy companies can’t expand because their ingredient costs are too high.”
NCA’s President Larry Graham is also the chairman of the Coalition for Sugar Reform, which lobbies for changes in the current U.S. sugar program. It is comprised of groups representing free trade advocates, sweetener users and baking associations.
The coalition claims sugar policy limiting imports harms the ongoing trade negotiations for the Trans Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).
“Sugar market access must be addressed both to allow for sugar imports into the United States when needed and to help ensure trade liberalization for other key commodities,” the coalition states.
On the other hand, sugar producers say opening the U.S. to subsidized foreign sugar would flood the market and harm American producers. They take issue with a North American Free Trade Agreement provision that allows Mexican exports of sugar to the U.S. In March, the American Sugar Coalition (ASC) filed a complaint against Mexico with the U.S. International Trade Commission and Department of Commerce, alleging that Mexico was dumping its sugar into the U.S. market at prices below the cost of production.
Mexico’s actions will cost U.S. sugar producers almost $1 billion in net income for the 2013/2014 crop year, ASC said. Mexico exports to the U.S. increased in recent years, rising from 9 percent of the U.S. market in 2011/2012 to nearly 18 percent in 2012/2013, ASC said. Producers also point out that U.S. sugar prices have been cut in half since late 2011. U.S. sugar policy cost taxpayers $280 million in 2013 because USDA took actions to steady the market.
However, confectioners say the forfeiture on USDA sugar loans is the result of flawed policy and the sugar producers’ antidumping petition is “meant to shift blame for sugar market distortion from the failed U.S. sugar program to Mexico.”
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