Category Archives: The Sugar Beat

Sugar and Candy, Making La. Sweet for Centuries

Louisiana sugar producers are fond of saying that their industry is older than the country itself.  Formed when Jesuit priests first planted the crop in New Orleans in 1751, the industry has survived hurricanes, droughts, and even a Civil War to grow into an economic engine.

Sugar is woven into the fabric of the state’s heritage arguably as much any other crop anywhere else in the country and even has a college football bowl game named after it.

Unfortunately, a proud tradition doesn’t always equate financial success, which farmers in south Louisiana have found out the hard way in recent years.  A flood of subsidized Mexican sugar was dumped onto the U.S. market sending prices spiraling, even as the price for things like equipment, seed, and fuel steadily rose.

Global Sugar Market to Stay Sour; Global Subsidies Rise

World sugar prices are depressed and are likely to remain in the doldrums over the coming year as surpluses overhang the market. That’s according to a Dec. 24 report issued by Rabobank, one of the largest banks in the world and key lender to the U.S. food industry.

Rabobank pointed to the growing cycle of sugar cane, which is a semi-perennial crop that prevents producers from quickly downshifting production, as a factor in the continued oversupply.

India Adds Loan Forgiveness to Its Growing List of Subsidies

Months after receiving preferential government loans, Indian sugar farmers soon will be allowed to walk away from their debts without repayment of either principal or interest, according to a Dec. 9 article by Bloomberg.

The outlet explained how some well-heeled agribusinesses are using the free money to expand at a time when the world sugar market is awash in a glut of subsidized surplus.

Mars Profile a Must Read

Things are going well for Mars, the maker of treats like M&Ms and Snickers.  A recent profile on the company by the Wall Street Journal summed it up this way:

While many U.S. food companies are closing factories and cutting staff, Mars Inc. recently opened its first new chocolate factory in the country in 35 years to feed Americans’ seemingly boundless hunger for sweets.

The $270 million plant boasts two production lines that can produce 8 million miniature Snickers candy bars and 39 million peanut M&M’s every day. At one end of the line, a waterfall of milk chocolate covers hundreds of tiny Snickers bars each minute, infusing the air with the smell of candy. The factory’s 500,000 square feet, kept carefully at 68 degrees so the chocolate doesn’t melt, include space for another three production lines so Mars can expand.

The article offered a small peak inside of a company that is privately held and usually keeps financial information close to the chest.

Mars discloses little about its finances, except to say that its annual revenue last year topped $33 billion—about 50% higher than in 2007, thanks largely to the 2008 acquisition of Wrigley. Chocolate is Mars’s second-biggest business globally, after pet care.

According to the Wall Street Journal, Mars is battling Hershey for a bigger slice of the U.S. chocolate market, growing from 24% to 28% over the past year.

Wall Street Journal Prints ASA Letter

Earlier this week, a longtime anti-sugar critic penned an article in the Wall Street Journal attacking U.S. sugar farmers and the policy on which they depend.

Fortunately, the newspaper brought some balance to the debate by publishing the American Sugar Alliance’s response to the article today.

Sugar Subsidy Escalation Harms Africa

A Wall Street Journal article published in October detailed how the sugar subsidy race between Brazil, India, Thailand, and even China is now hurting poor farmers in Africa.

“For much of the past decade, African and foreign sugar companies have pumped billions of dollars into projects in an attempt to tap the sweet tooth of the continent’s new middle class. Today, mills in many countries are grappling with unsustainable stockpiles. The glut has forced companies to reduce output, put on hold new sugar projects and shutter mills.

“The culprit: cheap imports. African nations import about 5 million metric tons of sugar every year, from countries such as Brazil, China and India. The imports—generally heavily subsidized—are sold at prices lower than the cost of producing sugar locally, prompting African countries to shun sugar from their neighbors.”

Global Subsidy Race Becoming a Three-Way Thai

We’ve spent a tremendous amount of time on these pages chronicling the massive run-up in sugar subsidies in Brazil and India. But one offender, Thailand, has largely gotten a pass…until now.

To better understand Thai sugar subsidies, it is important to first understand Thai sugar production.

U.S. Ends 2014 Crop Year with Surplus Sugar

All the little ghosts, goblins, and ghouls won’t have to worry about there being enough sugar to make their favorite Halloween treats this year.

That’s according to the U.S. Department of Agriculture, which recently reported that as of September 30, America’s sugar stocks-to-use ratio was 15.2%.

Indian Sugar Subsidies Grow Again

If you’ve developed a wicked case of whiplash keeping track of all the news about Indian sugar subsidies, you’re not alone.

Making it Rain…Chocolate

“It seems to be a good time to be a chocolatier,” a trade publication devoted to the candy industry recently reported.

In fact, according to the article, chocolate sales were up 24% from 2008 to 2013 and are expected to climb another 14% from 2014 to 2018.

Damage Caused by Subsidized Mexican Sugar Comes in Focus

In its latest acreage report, USDA notes that acres of both sugarbeets and sugarcane are down this year – 1.7% and 3.5% respectively.

Since Mexico began flooding the U.S. market with dumped and subsidized product, U.S. prices have fallen, costing U.S. producers an estimated $1 billion on this crop alone. This depressed business environment is leading to contraction by efficient U.S. producers while inefficient Mexican producers seize more and more market share with the aid of unfair trade.

Grower Profile: Ardis Hammock

Her motto has been “Life isn’t a bowl of cherries – it is a bunch of raisins: raisin’ cane, raisin’ kids and raisin’ hope for a better tomorrow.”

A Flood of Sugar Slips Through Broken Promises

Mexico had agreed to redirect shipments of subsidized sugar to other countries instead of the United States. But it is doing the exact opposite of what it promised. Mexico is actually accelerating exports of subsidized sugar to the U.S. and further injuring U.S. sugar producers.

Eight Going on Nine

We wanted to take a moment to thank the 32 members of the Appropriations Committee who stood with America’s sugar farmers. In particular, we wanted to spotlight the four appropriators who made impassioned speeches against Big Candy’s power grab.

It’s Good to be the King

Why are Big Candy lobbyists continuously complaining about sugar farmers and crying poor on Capitol Hill? All the evidence suggests that Candy is King.

A History Lesson Not Worth Reliving

In case you’ve forgotten, May marks the 72nd anniversary of sugar rationing in this country. Sugar was the first crop rationed in 1942, and it was the last commodity removed from the rationing list five years later. Back then, America didn’t have a nationwide domestic sugar industry and the Western States relied on shipments from the Philippines and Hawaii. But the Japanese conquered the Philippines and ships in Hawaii normally used to ship sugar were needed for the war effort.

The Big Dump Could Get Bigger

Here are a few attention grabbers about the record amount of subsidized sugar Mexico dumped onto the U.S. market last year.

• Mexico sent an all-time high 2.1 million tons of sugar to America in FY2013.  For perspective, that’s enough to supply every person in the U.S. with 13 pounds of sugar.
• This was up from 1.1 million tons the year earlier and marked a doubling of Mexico’s share of the U.S. market from 9% to 18%.
• The resulting price decline—U.S. prices have fallen 50% since the end of 2011—will cost U.S. producers $1 billion this year.
• The USDA was forced to spend $278 million in taxpayer money to keep the market from collapsing under the weight of Mexico’s dumped sugar.
• Mexico’s government, which owns and operates 20% of the Mexican sugar industry, is the country’s biggest producer and exporter of sugar.

The fact that an inefficient industry largely controlled by the government strengthened its foothold in America at the expense of U.S. farmers and U.S. taxpayers is alarming.  But apparently, it’s just the beginning.

New USDA data show that Mexico is dumping sugar at an even faster pace this year than last.  In fact, the 1.3 million tons that has arrived in the first seven months of FY2014 is 48% higher than over the same period the year prior.