For Immediate Release: April 18, 2016
Contact: Phillip Hayes, 202-507-8303
WASHINGTON – Since the current U.S. sugar policy took hold in 2008, candy companies and producers of other sugar containing products (SCP) have added jobs, increased production, and boosted profitability, according to a new study by the dean of the University of Maryland’s business school.
Dr. Alex Triantis, who prepared the report for the American Sugar Alliance (ASA), wrote: “During 2009-2014 – a period that included a U.S. economic recession and unusually high world and U.S. sugar prices – SCP industry jobs rose by 3 percent while non-sweetened-food industry jobs were flat.”
This stands in sharp contrast to claims made by candy company lobbyists, who want to dismantle U.S. sugar policy and open the domestic market to a flood of subsidized foreign sugar. But confectioners’ claims of being financially harmed by the current policy don’t reflect economic reality.
“The SCP industry has been faring very well under current U.S. sugar policy,” Triantis said. “SCP companies have experienced strong revenue growth over time. These companies have high profitability and high returns on equity, even when sugar prices increase.”
He also explained that SCP companies have generated impressive returns for shareholders in recent years, adding, “their stocks are priced to reflect strong expectations for the future.”
To help illustrate his point, Triantis examined the nine largest publicly held SCP companies. These companies saw share prices more than double in the past 15 years – nearly triple the growth of the S&P Index. Revenues grew by 131 percent over that period, which is double the growth of the U.S. economy. And SCP companies realized profit margins that were 67 percent higher than the overall food processing industry.
“We love that our customers are thriving, and we are proud to be an integral part of the supply chain that makes it possible,” said ASA Chairman Luther Markwart. “We also realize that without a strong U.S. sugar policy in place that chain would be broken and everyone, including grocery shoppers, would suffer.”
Triantis concurred and noted that unlike SCP companies, which are largely insulated from fluctuation in the cost of sugar, U.S. sugar producers are vulnerable to policy changes that would affect prices. Over the past 25 years, he said, sugar industry employment has dropped roughly 40 percent because sugar prices have fallen by 40 percent over that same period, when corrected for inflation.
“While employment in sugar growing and processing has declined significantly over the past two decades,” he concluded, “the sugar sector still supports a large number of jobs that would be at high risk of disappearing if the current U.S. sugar policy were to be significantly modified or rescinded.”