The Tale of Two Intertwined Industries

Published in the March 2012 Issue Published online: Mar 13, 2012 Alan Welp
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Western Sugar, a company now owned by farmers, closed its Goodland, Kan., sugarbeet factory in 1985. Sugar prices were low, the cost of doing business was climbing, and tough decisions were made that hurt workers and farmers.

The Kansans who lost their jobs weren't alone. From 1985 to 2008 low sugar prices remained stagnant as costs continued their upward march, 53 sugar-producing facilities across the country closed their doors, and more than 100,000 sugar related jobs were lost.

But things are turning around in Kansas and elsewhere, and sugar again seems to be at the center of it all.

Despite the recent economic meltdown, the candy-making business is booming. Since the housing bubble popped in 2008, the U.S. Census Bureau notes that production of confections in America have remarkably climbed 2.5 percent.

Big candy makers earned the description of being "recession proof" among Wall Street traders and have posted record profits and a rosy sales outlook. Just a few months ago, the confectioners even cashed in on one of the most profitable holidays ever, selling $2.3 billion in Halloween candy.

All this added business has lead to U.S. expansion and job growth as well, and Kansas is poised to be a big beneficiary. Mars, Inc. just broke ground on a new 350,000-square-foot factory in Topeka, which the company says will add at least 200 local jobs.

This story is playing out in other parts of the country, too. Spangler Candy, which makes Dum Dum suckers, is expanding its Ohio operations and adding 20 to 30 jobs to keep pace with growing demand. BestSweet just announced a $6.4 million expansion that should generate 37 extra jobs in North Carolina. And other stories of new candy jobs are sprouting up from California to New York.

As for sugar producers, two decades of bad news appears to have subsided, which is more good news for the 18 states where sugar is still made.

Sugar prices have rebounded to enable companies to pay off debt and make infrastructure investments for the future. Best of all, the plant closure problem has reversed itself.

So, with so many positive developments for sugar producers and sugar users since 2008, why are sugar farmers and candy companies bickering on Capitol Hill right now?

Because Congress passed a sugar policy in 2008 that confectioners-despite their undisputed economic success-aren't happy with.

Back in 2008, sugar farmers rejected confectioners' pleas to accept $1.3 billion a year in government subsidy checks-a controversial policy that would have theoretically sent sugar prices downward to help candy makers boost profits while using taxpayer dollars to insulate farmers from the wild market ride.

Sugar growers instead backed Congress' plan to preserve a policy that operates at no cost to taxpayers but may keep the prices candy companies pay a little higher by avoiding market oversupplies.

Congress' plan clearly prevailed, and by the looks of the fiscal health of candy producers and the recent recovery by sugar growers, it's a good thing for the economy that it did.

With the 2012 farm bill on the horizon, confectioners are again clamoring for extreme change in hopes of further boosting their bottom lines. And again, sugar growers and taxpayers would wind up on the losing end. Not to mention, Kansans. If more Midwest sugar factories go under, who will provide the commodity needed to keep Topeka's new plant humming?

It's not often Congress comes up with a no-cost policy that works. Lawmakers struck gold in 2008, and now is not the time to upend this no-cost success story.