Sugar interests say study proves program effective
By JOHN O'CONNELL
A University of Maryland business professor's new report analyzing 10 large, publicly held producers of products containing sugar concludes the companies are adding more jobs and earning substantially greater profits compared with the food processing industry in general.
As Congress commences its mark-up of a new farm bill, officials with the American Sugar Alliance, which commissioned the report, believe the data provide timely evidence that current U.S. sugar policy is effective.
Alexander Triantis calculated share prices of the companies he studied have increased 300 percent since 2000. By comparison, the Standard and Poor's 500 remained flat during that time. That index includes the 500 largest companies in the U.S.
From 2004 to 2012, the net profits of manufacturers of products containing sugars were 17 percent higher than the average of other publicly traded companies, and 60 percent higher than the overall food processing industry, Triantis estimated.
Though other food processing companies have reported 3 percent employment declines since 2006, Triantis said his target group increased hiring by 0.4 percent.
"We didn't realize they were flourishing that much more than even the food processors that weren't using sugar," said Jack Roney, ASA director of economics and policy analysis.
U.S. sugar policy implements price supports to maintain a minimum price through loans to sugar processors, marketing control to regulate sales and indirectly regulate production by preventing surpluses and import quotas to regulate the flow of sugar into the U.S., where prices are typically twice as high as world market prices.
ASA spokesman Phillip Hayes emphasized it's a no-cost policy to the general public. Opponents of the policy, including sweetened product producers, contend it costs jobs, hurts profitability and growth of the industry and results in a closed U.S. sugar market.
Triantis said sugar constitutes just 4 percent of a manufacturers' costs.
Roney said sugar prices have remained flat for several years. A candy bar produced today includes 2 cents worth of sugar -- the same as in 1983 -- but is now priced 300 percent higher, Roney said.
"If U.S. sugar policy were to be altered in any significant way, a large number of jobs supported by the sugar industry would be lost, and there is no evidence that consumers would benefit in the form of lower sugar-containing product prices," Triantis said.
Prices for U.S. sugar are now below the cost of importing sugar, and the U.S. is facing its largest sugar surplus since 2000, Roney said. He attributes the surplus to unlimited access to the U.S. market granted to Mexican sugar and other trade agreements. The U.S. government is mulling the option of diverting sugar for ethanol to address the oversupply.
"We have been aware that the sugar policy critics have been circulating some amendments and trying to get some support for those," Roney said. "We are reasonably confident that the message we have about no-cost sugar policy and the benefits ... should enable us to prevail."