Candy, Soda Makers Seek End to U.S. Sugar Program

Say it keeps prices high by restricting imports

Published in CSP Daily News

WASHINGTON -- Makers of sodas, candy bars and other sweetened snacks are taking aim at a longstanding federal program that keeps sugar prices high by restricting imports, reported The Los Angeles Times. Doing away with the sugar program would be a "huge boost" to candy makers and help them grow, Robert Simpson Jr., president of Jelly Belly Candy Co., Fairfield, Calif., told the  newspaper.

But the efforts of manufacturers are sparking intense opposition among lawmakers from sugar-growing states and the sugar lobby, as well as from some public health advocates, said the report.

"Is this where we need Congress to spend its time, trying to make cheap candy bars?" Mark Muller, director of the food and justice program at the advocacy group Institute for Agriculture & Trade Policy, told the paper.

The battle is focused on a farm bill that renews the decades-old sugar program. The Senate voted down efforts to repeal or roll back the sugar program when it passed the bill last month. But as the House takes up the legislation next week--a draft bill proposes to keep the sugar program intact--candy makers and their allies are hoping for better luck in the Republican-controlled chamber.

"There's a better political climate for us this time around," Larry Graham, chairman of the Coalition for Sugar Reform, told the Times. The coalition tried to kill the sugar program in 2008 when the last farm bill was passed. "We think there's going to be a good fight in the House."

Members of the coalition include the U.S. Chamber of Commerce and the conservative Club for Growth. The chamber recently put lawmakers on notice that backing the "chronically flawed policy" could earn them the ire of the powerful business group.

The sugar program costs consumers as much as $3.5 billion a year in higher food prices, the coalition argued.

Under the program, at least 85% of sugar sold in the United States must come from domestic processors. Sugar supplies are managed by the U.S. Department of Agriculture, which tells U.S. sugar companies how much they can sell and limits how much low-tariff sugar can be imported from overseas.

The government also can buy up excess sugar and sell it to ethanol makers--even at a loss--to avoid price slumps. The Congressional Budget Office expects the sugar-to-ethanol portion of the program to cost taxpayers $193 million over the next decade.

U.S. sugar producers are guaranteed minimum prices through federal loans that allow them to borrow against their sugar supplies at a specific per-pound rate. If market prices drop below the specified price, producers can forfeit the sugar instead of repaying the loans in cash.

Supporters said the program provides safe, American-made sugar at little cost to taxpayers.

"Otherwise, you're at the mercy of the agencies that set regulations for other countries," said Mickey Seither, an executive at American Sugar Refining, which owns a cane refinery in Crockett, Calif.

"To us, it's much better to be in control of that final product that goes out to consumers," he told the paper.

And the program helps the $20 billion growing and processing industry continue to employ 142,000 workers nationwide, supporters contend. They also question whether food and beverage makers would pass along the savings if sugar prices were lower.

"History has shown that food manufacturers will pocket any savings in ingredient costs to boost their profits instead of passing those savings along to consumers though lower food prices," Phillip Hayes, a spokesperson for the American Sugar Alliance, which represents sugar growers and processors, told the paper.

Wholesale refined sugar prices are down 19% since August 2010, but the price of candy and gum--products that count sugar as their main ingredient--have climbed 7%, he said.