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Bakers: US sugar prices are still 50-75% higher than world prices

By Elaine WATSON , 20-Sep-2012

The American Bakers Association (ABA) says it is only a matter of time before “some form of a [sugar] reform amendment passes in the House”, although sugar producers say the US should learn some lessons from Europe and stop trying to fix something that isn’t broken.

Government relations director Cory Martin was speaking to FoodNavigator-USA after ABA members Bimbo Bakeries USA, Flowers Foods and Krispy Kreme met members of Congress and their staff to urge reform of the US sugar program. 

While amendments to the Farm Bill that included revisions to the sugar regime did not pass in the Senate or the House Agriculture Committee this summer, political support for a change is growing, insisted Martin.

There are many supporters of reforming the sugar program in both the House and the Senate. This is the most pressure Congress has ever faced to reform the program.”

We’ve been able to garner bipartisan support in the House and the Senate

L-R: Steve Stocksdale from Krispy Kreme, Rep Rob Woodall (R-GA), and Mark Worthey from Flowers Foods

The Senate passed its version of the Farm Bill (which included the reauthorization of the current sugar program) in June, while the House Agriculture Committee passed its version in mid-July.

However, the Bill has been in limbo ever since, “as it looks like House leadership is unwilling to bring it forward this close to the election”, said Martin. 

“As for sugar reform, we always knew getting an amendment passed in the Ag Committee hearings would be an uphill climb, so losing these votes was not unexpected. 

“We came very, very close in the Senate, losing one vote by just 4 votes [50-46 against], and we are confident that some form of a reform amendment will pass in the House, if and when it ever comes up for a full floor vote…

“We’ve been able to garner bipartisan support in both the House and the Senate.”

NCA: We continue to believe that a debate with the full House on the floor has the best chance

The National Confectioners Association (NCA), which is holding its Fall Forum this week, told FoodNavigator-USA that "close to 100 members will be coming to town to urge Congress to incorporate sugar reform into the Farm Bill".

A spokeswoman said: "We are very disappointed with what came out of the Senate as well as the House Ag committee but continue to believe that a debate with the full House on the floor has the best chance.

She added: "More and more members of Congress are... understanding that this program is bigger than candy and impacts over 600,000 jobs across the country in the sugar using industry.

"We got one of the closest votes in history in the Senate and the more light that is shed on this program, the more members of Congress who are interested in eliminating government waste and letting companies operate in a free market place are changing their minds."

US sugar prices are still anywhere from 50-75% more than world prices

US sugar prices are still 50-75% more than world prices, claims the ABA

Bakers and confectioners argue that the sugar regime forces them to pay over the odds for sugar, making them less competitive and sending food manufacturing jobs overseas.   

The US sugar program, which sets import quotas on sugar, enforces a minimum price for sugar in the US market, limits how much US sugar processors can sell, and forces USDA to buy surpluses and sell them to ethanol refineries, means US sugar prices are artificially high, claimed Martin.

But how much more are US food manufacturers paying for sugar?

As recently as four to six months ago, US sugar users were paying almost twice the world average price for sugar”, said Martin.

“Today, the disparity has decreased, but US sugar prices are still anywhere from 50-75% more than world prices.”

Amendment to pare back program to pre-2008 regime

While ABA members would like to see the program scrapped completely, they accepted that a more realistic goal was an amendment that “would pare back the program to how it operated before the passage of the 2008 farm bill”, he said.

“It would still maintain import restrictions and loan rate guarantees, but it would open the program up a bit and allow the USDA to better respond to supply needs.” 

The NCA spokeswoman added: "Even reforming the program back to the 2008 Farm Bill levels would be an improvement. Our lobbying goals are to educate every member of Congress about an amendment that will be offered that reforms the program, whenever Congress picks up this issue again."

American Sugar Alliance: Food manufacturers have nothing to complain about

However, the American Sugar Alliance, which represents sugar growers, says food manufacturers “have nothing to complain about”.

US bakers and confectioners “pay less for sugar than their counterparts in other developed countries and have actually grown sales during the recession”, it claims.

And if confectioners have moved overseas, this probably has more to do with cheaper labor, lower operating costs and less stringent environmental regulations than cheaper sugar prices, claims the alliance, which has just unveiled an ad campaign that compares confectioners’ earnings to that of casinos, oil companies and defense contractors – with big candy coming out on top every time.

In a press release about the ads, the alliance said: “Big Candy has quietly gotten rich on the backs of farmers and American workers. Now they’re lobbying Congress to bankrupt farms and outsource sugar jobs so they can pocket a few extra pennies a pound.”

Report uses sugar price data from time when prices were abnormally high

The Alliance also attacked a 2011 report by Iowa State University it says is being cited by food manufacturers to help make the case for sugar reform.

The report, which was funded by the Sweetener Users Association (SUA), has “major flaws”, according to an analysis conducted by University of Maryland Professor Alexander J. Triantis, Ph.D, says the Alliance.

“This is significant because confectioners are lobbying Capitol Hill this week and will cite the SUA analysis as reason to weaken the country’s no-cost sugar policy in the 2012 Farm Bill.”

Among many criticisms, Triantis notes that the Iowa researchers “used sugar price data from a period when prices were abnormally high in order to magnify purported gains from eliminating the US sugar program”.

Lessons from Europe?

In a study released at the 29th International Sweetener Symposium last month, Patrick Chatenay from UK-based company ProSunergy argued that sugar reform in Europe had led to the closure of 83 sugar mills and 120,000 job losses, volatile prices and supply shortages.

Meanwhile, European food manufacturers that had been pushing for reform were now “desperately looking for adequate supply and complaining about an increase of 40% in sugar price within the last year”, claimed Chatenay.

“Surely, there are lessons to be pondered here as American policymakers look to decide on the future of the US sugar policy?”

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