Chocolate, Candy Makers Call for Sugar Program Reform During National Candy Month

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Washington, DC — National Candy Month is a time to reflect on classic American manufacturing success stories that include strong leadership from America’s foremost chocolate and candy companies when it comes to helping people manage their sugar intake.

The National Confectioners Association (NCA) is at the forefront of National Candy Month, encouraging its hundreds of member companies to join in the celebration. “Throughout the month of June, while millions of Americans continue to enjoy their favorite treats, we have been telling the story of innovation in chocolate, candy, gum and mints — innovation made possible by the 465,000 people who work in and around the confectionery industry,” says Christopher Gindlesperger, vice-president of public affairs and communications for NCA.

Shot of barline at Nestle's Fawdon, UK, factory.
The U.S. confectionery industry supports 465,000 jobs.

There are countless stories in the confectionery industry that showcase family businesses and brands that date back generations, Gindlesperger notes. Yet despite the enjoyment confectionery products bring to consumers, the ability of manufacturers to continue growing, innovating and creating jobs is being hampered by a protectionist policy that artificially inflates ingredient costs, he tells CST.

“Unfortunately, for decades, the U.S. government has blocked chocolate and candy companies from openly buying sugar from the world market. Because the government has limited our competiveness, it is forcing us to pay twice as much for our primary ingredient,” he tells CST.

What Is The U.S. Sugar Program?

The U.S. Sugar Program, is a product of the Great Depression and has remained intact through the influence of a single special interest group — the U.S. sugar growing and refining lobby. In fact, the sugar program was the only commodity program not reformed in the 2014 Farm Bill.

The program sets the commodity price for sugar for the food and beverage companies that use it as an ingredient, effectively making sugar about twice as expensive for U.S.-based manufacturers as for companies based elsewhere in the world.

The sugar program allows the federal government to directly and indirectly support wealthy plantation and refinery owners, including placing limits on domestic production and imports, as well as government-guaranteed loans and forced purchases. In short, according to Gindlesperger, the sugar subsidy lets the federal government cherry-pick winners and losers.

Today, the program benefits a small handful of wealthy corporate plantation owners, he says. “Only 14 sugar companies from a handful of states reap the benefits of this program, while it puts thousands of jobs at risk across all 50 states in companies that use sugar as an ingredient,” Gindlesperger points out.

In addition, the sugar program acts as a hidden tax that costs Americans as much as $3.5 billion per year in increased cost of goods.

“What’s more,” notes Gindlesperger, “the program puts the U.S. confectionery industry at a competitive disadvantage against competitors who have access to lower global sugar market prices.”

Candy Makers Struggle To Maintain U.S. Factories

NCA member Spangler Candy Co. has found itself on the losing end of this policy for years, yet continues to hold strong to maintaining at least some of its manufacturing of candy canes in the U.S. It is the only company still producing the holiday staple domestically.

The recent trade deal struck between the U.S. and Mexico put Spangler in the spotlight as a main source in a Reuters article pointing out the impact of the sugar import agreement. The article points out that competitors of the Ohio-based company have, over the years, moved their plants to other countries to gain unfettered access to cheaper ingredients.

Kirk Vashaw, Spangler Candy Co.

“To be honest, I’m just very disappointed the Trump administration didn’t do more to level the playing field, which is something they promised over and over again to do for the American worker,” Vashaw said in an interview with Reuters.

In the same article, Jeanne Shaheen, a Democratic senator from New Hampshire, where NCA member company Lindt & Sprüngli USA Inc. has its headquarters, said: “This is putting America second. It’s a bad deal for American families and businesses that will raise costs for consumers and threaten jobs in sugar-using industries.”

For Spangler, which makes Dum Dum lollipops as well, the rise in prices for Mexican sugar will translate to around an 8 percent rise in what it pays, Vashaw estimates.

Spangler opened a plant in Juarez, Mexico, in the early 2000s and now produces more than half its candy canes there. “If it was all about money, we’d do it all in Mexico,” said Vashaw. “When your main cost driver just went up 8 percent and in Mexico it didn’t go up at all, it just makes any foreign confectionery supplier more cost competitive. That’s why a lot of companies moved out of the United States.”

Further illustrating the broad reaching impact of the program, the sugar-using industry, which once employed more than 700,000 American workers, experienced a decline of 132,000 jobs or 18 percent since 1997, according to the U.S. Census Bureau’s 2014 Annual Survey of Manufacturers.

In a recent article in the Houston Chronicle, NCA member Atkinson Candy Co. President Eric Atkinson noted the company has lost a large share of its business to foreign suppliers, forcing him to cut back production to three days a week at times. He also pointed out that the company built and shifted some production to Guatemala to take advantage of lower sugar prices there.

Eric Atkinson, Atkinson Candy Co.

Because of U.S. price supports and trade barriers, the article stated, Atkinson pays about double what its foreign competitors do for the industry’s main ingredient, putting constant pressure on the family-owned business to either sell out, shut down or shift production overseas.

Atkinson Candy should serve as a reminder that many companies and workers in America benefit from free-flowing trade, and policies aimed at protecting certain jobs and industries from foreign competition can have devastating effects on others.

Gindlesperger states many other companies that provide jobs in the manufacturing of classic American treats share the experiences of Atkinson and Vashaw. “Hundreds of thousands of good-paying American jobs rely in part on the manufacturing and sales of chocolate and candy. When Congress reforms the sugar program, we are standing ready to create even more jobs,” he says. CST

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