Multinational candy companies received a grim warning from one of the food industry’s most respected analysts on the same day they sent government officials a letter begging for yet another unneeded mountain of subsidized foreign sugar.
Imports
“Our recommendation: be careful,” was the advice provided by California-based McKeany-Flavell Company to people looking to greatly increase America’s reliance on imports.
“Significantly greater United States dependence on imported sugar may not guarantee lower sugar pricing over the long term,” read the McKeany-Flavell report.
The study cited the 1970s as proof, when food manufacturers largely depended on the world market and saw volatile price swings that sent prices two and three times higher than current U.S. levels.
Domestic Producers’ Potential Plight
McKeany-Flavell further explained that delivery issues and inconsistent supplies and quality would also arise if domestic producers go belly up.
“[W]e must recognize the value U.S. sugar producers offer to consumers,” they wrote. “Providing consistent quality and supply, in the requested packaged form, and through just-in-time deliveries…is a very complex and difficult process that cannot be recreated overnight, if at all, through a 100 percent sugar import program.”
So why are big food companies still hounding Congress and the Administration to adopt policies that would push aside U.S. farmers in favor of subsidized companies overseas?
The answer: Good old-fashioned greed.
Candy Advantage
The National Confectioners Association summed up the current state of the candy business on their website by saying, “Not only is confectionery a large product category at $28.2 billion in retail sales, it is a high profit category. Margins average more than 35 percent for the category.”
Not many U.S. manufacturers can boast a 35-percent profit margin.
And I can tell you first hand that no farmers are getting that kind of return.
Yet these companies continue to press for lower and lower sugar prices so their profit margins can swell.
Economic Squeeze
As McKeany-Flavell said, these food manufacturers need to be careful. In their quest to further bloat already unbelievable returns, they run a real danger of crippling the very suppliers they depend on to keep their assembly lines moving.
Already, 35 U.S. sugar mills and refineries have closed in the past decade, and current economic stress is putting the squeeze on those that remain.
The raw sugar price I receive for my crop has dropped like a rock in recent months to levels that guarantee cane farmers will see a steep loss this year.
We are under siege from unneeded Mexican sugar as a result of NAFTA, with Mexican government officials warning their U.S. counterparts that much more sugar is on the way.
And the USDA keeps upping its surplus projections for the coming year.
Main Point
The bottom line is we don’t need any additional foreign sugar on our market.
That message was recently delivered to Congress by dozens of sugar farmers from across the country.
Let’s hope lawmakers have enough sense to heed their warning.
After all, there’s a lot more on the line than a handful of multi-billion-dollar food companies disrupting their supply chain.
Our struggling economy would also take a hit to the tune of $10 billion in lost productivity and 146,000 unemployed Americans without a vibrant domestic sugar industry.
That’s a far cry from stimulating the economy.