New research is shedding light on numerous flaws in Big Candy’s main arguments against America’s no-cost sugar policy.
Findings by Professor Alexander J. Triantis Ph.D., former chair of the University of Maryland’s finance department, debunk claims by the candy manufacturers regarding the impact of America’s sugar policy on jobs and the economy.
Triantis reviewed both a controversial 2006 U.S. Department of Commerce (Commerce) report and an Iowa State University report that was funded by the Sweetener Users Association (SUA). These reports have become the linchpins of the confectioners’ spin.
The findings are significant because confectioners are lobbying Capitol Hill this week and will cite these flawed studies as reason to weaken the country’s no-cost sugar policy in the 2012 Farm Bill.
"More jobs are saved than lost, if any are lost at all, by the U.S. sugar program," Triantis concluded.
"Sugar content as a percentage of total cost is much lower than cited in the Commerce report," he wrote. "The claim that sugar prices potentially affect tens of thousands of jobs in Sugar Containing Product (SCP) industries, many of whose input costs are insignificantly affected by sugar prices, is thus greatly overstated."
Triantis noted that "many SCP industries have seen job growth," and that like other industries, the SCP jobs lost were "driven by higher productivity in the U.S. and lower labor costs abroad," not by sugar.
Triantis was also critical of the Commerce report because it "grossly understates the number of U.S. sugar industry jobs that could be lost if the U.S. sugar program were to be eliminated." Commerce tied just 2,260 sugar jobs to no-cost sugar policy — a figure it did not calculate but rather derived from a 1994 study conducted by private think tank that opposed sugar policy.
Triantis explained that figures from a U.S. International Trade Commission report cited by Commerce imply nearly 80,000 sugar jobs would be lost absent no-cost sugar policy, 35 times higher than the Commerce study concluded.
Regarding the Iowa State University report, Triantis said the report’s conclusions about the consequences of eliminating U.S. sugar policy are just flat out inaccurate.
According to Triantis, researchers assume food manufacturers would pass along savings from lower sugar prices to grocery shoppers instead of pocketing the savings as windfall profit, which is hardly the case.
Triantis also said researchers used sugar price data from a period when prices were abnormally high in order to "magnify purported gains from eliminating the U.S. sugar program," and built a forecast model without taking into account the volatility of sugar markets, which significantly affects business decisions. In addition, researchers assume sugar-containing product (SCP) exports will surge absent U.S. sugar policy, Triantis said.
"All the various concerns with the SUA analysis raised above call into question the ability of such a model to predict what would happen if the U.S. sugar program were eliminated," Triantis concluded. "The results, interpretations and conclusions emerging from the SUA analysis should therefore not be relied upon in making important decisions regarding the future of U.S. sugar policy."
The American Sugar Alliance, which commissioned Triantis’ critique, believes the European Union provides much better insight into the consequences of becoming more dependent on foreign sugar suppliers. Since 2006, when the EU adopted many of the policies being touted by confectioners, 120,000 jobs have been lost, sugar prices have risen, grocery shoppers have paid more for sugar-sweetened products, taxpayer cost has increased, and supply interruptions have surfaced.