New USDA Data Will Affect Sugar Policy Debate

Published in the April 2013 Issue Published online: Apr 01, 2013 Phillip Hayes
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In February, the U.S. Department of Agriculture released three key data points that got lots of attention on Capitol Hill and weakened attempts by the Big Candy lobby to gut U.S. sugar policy and outsource America's domestic production.

First the USDA reported average sugar prices for the month of January continued its downward trajectory. At the same time, U.S. sugar farmers are grappling with growing production costs.

The raw sugar price that many sugar farmers receive fell to 21 cents per pound. The wholesale refined price candy makers pay dipped to 30.5 cents. For perspective confectioners would pay more for sugar in Mexico, and it would cost more to ship raw sugar in from Brazil-the two heavily subsidized producers Big Candy wants America to become dependent upon.

But Big Candy isn't sharing its windfall from falling ingredient costs with everyday consumers. In 2008, the year the current sugar policy took hold, confectioners paid 2 cents less per pound of sugar than they do today, and they charged grocery shoppers 90 cents for a candy bar.

Currently, that same 90-cent candy bar costs $1.39, a 54 percent hike that explains how candy companies have achieved higher profit margins than even the world's biggest oil companies, according to Yahoo! Finance.

And this low-ingredient-cost, high-profit-margin environment should continue, based on a second USDA report issued recently. According to the department's sugar supply and demand outlook, America is knee-deep in surplus sugar.

In fact, a record 2.3 million tons of unneeded sugar is overhanging the market and depressing prices. That would be enough surplus to give every American 14 pounds of sugar on top of what they are already consuming.

Despite today's market challenges and dismal outlook, the USDA budget outlook projects that sugar policy is expected to operate without government expense through at least 2022. The policy has operated without taxpayer expense since 2002.

So if large candy companies are enjoying record profits and low sugar prices, and if American consumers are paying less for sugar than other countries and getting a great return as taxpayers, why all the fuss?

That's easy. Multinational food companies are profit hungry, and they are willing to spend millions on lobbying to squeeze out even a couple extra pennies a pound, even if they have to do it at the expense of 142,000 U.S. sugar jobs, American consumers and this country's food security.

It should be a pretty easy choice for lawmakers. Support current sugar policy-it works.