For multinational candy companies, the ongoing debate over no-cost sugar policy boils down to price and profit. And they seem to be doing well on both fronts, according to the annual Sugar Price Survey released by the American Sugar Alliance (ASA) at the 29th International Sweetener Symposium.
Even though most agricultural commodities are increasing in value, wholesale sugar prices have fallen 30 percent over the past two years and continue a downward march because of surplus stocks.
Producers of sugar-sweetened foods are pocketing the savings from these falling sugar prices, ASA found, instead of sharing the windfall with grocery shoppers through lower food bills. In fact, the cost of candy, chocolates, and other sweetened products has risen over the same period.
"With ingredient costs falling and grocery store prices rising, it’s easy to see why profits are high for confectioners,” read the report, which also noted, “Data made available by both the candy and oil industries…show candy production as being far more profitable [than oil].”
To demonstrate the recent run-up in sweetened-product costs, ASA included a comparison of 2010 and 2012 prices from a grocery store in Arlington, Va.
“Chocolate bar prices are up 28 percent since the summer of 2010,” ASA discovered. “Other candy products included in the ASA’s annual price survey have climbed 20 percent, while cake mixes and frosting are 24 percent higher, and ice cream costs 48 percent more.”
In addition to falling sugar costs and higher consumer prices, confectioners have also benefitted from growing demand, which has increased domestic candy and chocolate production 2.5 percent under the current Farm Bill. And that’s meant factory expansions and job growth across the country.
Among the list of projects the report identified: Mars Inc.’s new $250 million facility in Kan.; Hershey Company’s 340,000 square-foot addition in Penn.; $20 million in expansions of BestSweet’s N.C. facilities; and a 30,000 square-foot expansion helped a Mo. chocolatier increase production tenfold.
Despite its success, the candy industry continues to cry poverty on Capitol Hill, ASA notes, and its lobbyists want to gut sugar policy and leave the country dependent on subsidized foreign sugar producers.
Dale Murden, a sugar farmer from Tex., put the legislative debate into perspective. “Our industry and the 142,000 jobs it supports are literally hanging in the balance,” he said. “Our opponents might increase their profit margins a fraction, but at what cost? Is it really worth bankrupting farms and costing thousands of sugar workers their jobs?”