The American Sugar Alliance has been posting stories on its website about the recent good fortunes of America’s candy makers. It ran a story earlier this year looking back at 2013 under the headline “Big Candy Profits Impress,” in which the sugar industry trade group heralded “a sensational year for America’s candy makers. Sales were up. Profits were high.” A more recent feature on the website included an entire page of news stories on “expansions and job growth coming out of the candy business.”
While that might seem like a nice thing to do for a key customer, the alliance’s intentions toward candy makers are anything but sweet.
As it happens, Big Candy and Big Sugar hate each other, a distaste that stems from the federal government’s policies governing home-grown sugar. Candy makers say it forces them to pay too much for sugar, costs American jobs, and puts them at a competitive disadvantage—and they have a point. The government’s sugar program includes price supports, production limits, and import quotas, all designed to boost the price for American growers of sugarcane and sugar beets. Supporters of free trade hate it almost as much as the candy makers.
“Largely as a result of government subsidies to the sugar industry, many food and beverage companies have found it extremely difficult to obtain adequate supplies of sugar,” says Larry Graham, chairman of the Coalition for Sugar Reform, in an open letter on the group’s website. “In years past, the anti-competitive effects of sugar subsidies have forced some of these companies to reluctantly move their facilities overseas.”
But the American Sugar Alliance says the program is necessary because other countries heavily subsidize their own domestic sugar industries. In addition, they maintain that the candy markers’ arguments are hard to swallow at a time when candy makers, such as Hershey and Mars, are posting big profits or expanding their facilities. A key reason is that a provision in the North America Free Trade Agreement allowed cheaper Mexican sugar to flow into the U.S., starting in 2008, says Phillip Hayes, spokesman for the American Sugar Alliance.
Hayes sees the candy makers’ complaints about being forced overseas as ancient history. The price of refined sugar was 56¢ per pound in 2011 and it was 27¢ last year, according to the U.S. Department of Agriculture. “They are expanding in the United States,” he says of the candy companies. “They still go up to Capitol Hill and say sugar policy is driving them overseas.”
On the candy industry’s recent success, he adds: “That’s great. Good for them. But don’t poor mouth on Capitol Hill.”
The candy makers aren’t amused by the alliance’s good-news-about-candy website posts. “What other ingredient supplier spends most of its PR time lambasting its main customer for making a profit?” Graham asked on Confectionery News.com.
Susan Smith, a spokeswoman for the National Confectioners Association, said in an e-mail: “It’s a distraction from the reality that sugar processors make their profits off the backs of taxpayers. The fact is that candy companies are forced to compete in an unfair and government-controlled marketplace.”
Source: www.businessweek.com