- Candy companies have been dubbed “recession-proof.”
- Confectioners plow profits into lobbying campaigns aimed at driving down the price of sugar.
- Texas produces about 160,000 tons of raw sugar
Half of all Valentine’s Day shoppers headed to the candy aisle this year, according to the National Retail Federation. And that means big dollars for candy companies—about $1.012 billion this past holiday, said the National Confectioners Association (NCA). And Valentine’s Day is only the fourth largest “candy” holiday of the year.
Business is so sweet for chocolatiers and confectioners right now that the NCA president recently boasted: “A lot of people think that it’s oil and energy that drives this economy, but it’s candy, it’s chocolate that’s doing well in this economy.”
Comparing candy’s economic prowess to oil and energy may be a stretch, but his point is a good one. Candy companies have been dubbed “recession-proof” on Wall Street for increasing production during the downturn, adding jobs, and making a lot of money for shareholders.
So why are their lobbyists so sour?
Every five years when Congress debates a new farm bill, confectioners plow boatloads of profits into slick lobbying campaigns aimed at driving down the price of one of their biggest ingredients—sugar. They tell lawmakers that U.S. sugar prices have led to economic woes.
Such claims feel a little hollow since most of us can walk into a restaurant and pick up free sugar packets, and it all seems disingenuous since the country’s best known confectioner just posted a 23 percent income increase in 2011.
Regardless, this talking point is as pervasive today as it was back in 2007, when the last farm bill was considered.
Back in 2007 food manufacturers put their muscle behind a scheme to use U.S. taxpayer subsidies—about $1.3 billion worth a year—to artificially deflate the wholesale price of sugar in America. Congress rejected any change and instead maintained a sugar policy that’s operated at no taxpayer cost for the past 10 years.
This time around, though, the companies are trying a new twist and are angling to have foreign governments underwrite their proposed windfall. By allowing subsidized foreign sugar to cascade into the U.S. market in unlimited quantities, prices would drop and candy company retail profit margins—already a healthy 35 percent—would climb.
There’s one major flaw in this equation though. It would spell the end of the U.S. sugar industry, which is among the most efficient in the world and doesn’t get subsidy checks.
Having lived with foreign oil dependency for decades now, lawmakers don’t seem too interested in handing over control of our food system, but that won’t prevent a bloody lobbying battle between candy makers and sugar producers.
What does all this have to do with Texas?
The state is a significant sugarcane producer thanks to a group of farmers that banded together in 1970 to raise funds and build a sugar mill. Today, Texas produces about 160,000 tons of raw sugar, even after enduring low prices and spiking input costs from 1980-2008.
Growers finally feel that they have a fair price, and a U.S. sugar industry that lost 100,000 jobs and shut 37 facilities since 1994, has stabilized. But the future remains fuzzy for the Texas industry until lawmakers rebuff the latest candy lobbyist onslaught.
This would seem like a good idea considering a $20 box of Valentine’s chocolate only has about 60 cents worth of sugar in it, which makes it hard to say either Texas sugar growers’ returns or the no-cost policy on which they depend are excessive.
About the author: Dale Murden grows sugarcane, citrus, grains, vegetables and soybeans near Monte Alto. He is chairman of the Rio Grande Valley SugarMill.