WASHINGTON – Researchers from the University of Tennessee released a study today that sheds new light on how sugar prices affect sweetened product prices, and their findings stand in sharp contrast to decades-old claims made by candy company lobbyists.
Drs. Karen DeLong and Carlos Trejo-Pech, of the university’s Department of Agricultural and Resource Economics, found that the retail cost of sweetened products, such as candy and baked goods, is not affected by the price that the food manufacturers pay for sugar. In fact, the researchers noted that sugar generally accounts for less than 2.6 percent of sweetened product prices.
“Sugar prices do not impact how food companies price their sweetened products in any statistically significant way, which ultimately reaffirms the fact that U.S. sugar policy does not harm sugar-using firms,” the authors concluded.
U.S. sugar policy involves loans that are repaid with interest instead of subsidy checks, which enable producers to store large amounts of sugar that can be delivered to customers when needed. The system operates without taxpayer cost.
“This study shows that there is little-to-no correlation between changes in sugar prices and the prices that grocery shoppers ultimately pay for sweet treats,” explained Rob Johansson, director of economics and policy analysis for the American Sugar Alliance, which commissioned the work.
“In other words, gutting U.S. sugar policy and outsourcing America’s sugar supply to subsidized companies abroad won’t yield positive results for U.S. consumers or food makers,” said Johansson, who previously served as chief economist for the U.S. Department of Agriculture. “It will only harm American farmers and workers.”
This study is the second conducted by the University of Tennessee about U.S. sugar policy and prices. The first, an independent peer-reviewed piece that was published June 2020 in Agricultural and Food Economics, found that U.S. sugar prices did not harm the financial performance of food manufacturers.
Drs. Karen DeLong and Carlos Trejo-Pech are scheduled to present their findings at the 2022 Southern Agricultural Economics Association meeting.