Sky-high sugar prices threaten US jobs, warn confectioners

By Michelle Knott

- Last updated on GMT

Related tags: Sugar, Cost, Confectionery, Supply and demand, Nca, Us

Inflated US sugar prices are threatening jobs throughout the country’s confectionery industry, warned the National Confectioners Association (NCA) in a letter to the US Department of Agriculture.

The letter calls on the USDA to address concerns that many US firms are paying almost twice as much for sugar as companies abroad.

“Several NCA members have called me over the past few days about the shockingly high price they paid for recent orders of sugar,”​ said NCA president Larry Graham. “Right now, domestic sugar is $0.62 per pound – nearly twice the price of sugar available to the rest of the world. This is totally unacceptable. In the 20 years I have served the confectionery industry, this is the most we’ve ever paid and the biggest discrepancy between domestic and world prices that I can recall.”

Global vs. domestic

Global market conditions have pushed sugar prices up during 2011, but the NCA lays much of the blame for the domestic situation on the US sugar program, which aims to protect growers.

“Basically the sugar price is propped up by extremely tight quotas on the amount of sugar which can be imported,”​ Susan Smith, the NCA’s senior vice president for strategic communications, told this publication. US sugar producers don’t grow enough sugar to supply the US market, so the USDA forecasts supply and demand and then lets in just enough sugar to almost supply the market. It’s a guessing game and the program is set up so that USDA nearly always underestimates supply needs.”

Losing jobs

“Over the last ten years, tens of thousands of jobs have been lost as companies downsize or move their expansions overseas or across the border in Canada and Mexico where sugar can be obtained at a lower cost,”​ said Smith. “Small and medium sized companies suffer the most because they don’t have the resources or the volume to lock in prices with their sugar suppliers.”

Around 4,700 sugar growers benefit from the federal sugar program, but the NCA points out that there are about 600,000 US jobs in food industries that use sugar. Some 112,000 jobs were lost in these sugar-using industries between 1997 and 2009. The Association also claims that the program costs consumers an estimated $4bn a year.

“The confectionery industry is not an enemy of the domestic sugar industry; they are our partners in the production of candy and we need them now and in the future,”​ stressed Graham. “It is my opinion, however, that USDA administration of this antiquated program is unduly favouring the sugar growers and refiners, and in doing so is hurting other important industries.”

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