A few years ago, my daughter and I took a tour of Kimmie Candy in Reno. Met the owner, Joe Dutra. Great guy. Great product. Great service. Great company. Great small business success story.
But in a recent guest column published by the Reno Gazette-Journal, Mr. Dutra perpetuated a multi-million dollar disinformation campaign being waged by Big Candy lobbyists in Washington, DC about the U.S. sugar program. So let’s clear the record.
First, I have to give Mr. Dutra credit. Unlike many of his colleagues in the sweets and treats biz, he acknowledged that the real problem driving up the manufacturing cost of sugar-infused products in the U.S. isn’t the cost of sugar.
“Beyond labor costs,” he writes, “the next largest input for food manufacturers happens to be ingredients.”
Indeed, the cost of labor in the U.S. is FAR above the cost of labor in other sugar-producing countries, such as Mexico, Brazil and India. And that’s the #1 reason the cost of a chocolate bar has skyrocketed from around 35-cents 35 years ago to around a $1.50 today.
But before you get to the cost of sugar, “next” on the list has to be the higher cost of employee benefits, the higher cost of insurance, the higher cost of government regulatory compliance, the higher cost of taxation, the higher cost of rent and the higher cost of equipment.
Then we can talk about sugar.
But here’s the thing: The cost of a pound of American-produced sugar today is pretty much the same as the cost of a pound of American-produced sugar was 35 years ago. So when Mr. Dutra claims “that the price of sugar has for generations been unnecessarily high due to government intervention,” that’s simply not accurate.
What he’s talking about is comparing apples to oranges on the world market. Indeed, sugar prices are often listed as lower in some of those foreign countries. But what Mr. Dutra failed to explain is that those foreign countries are subsidizing the production of sugar, resulting in artificially lower prices that place American farmers at a decidedly unfair competitive disadvantage.
What the U.S. sugar program does is limit the amount of imports coming into our country from foreign competitors who “cheat” the system, along with relatively minor tariffs on those countries to level the playing field for American farmers.
If Mr. Dutra and other candy-makers want Congress to do something to lower the candy manufacturing cost in the U.S., they should focus their attention on the real sources of increased costs, as well as support a resolution proposed by Rep. Ted Yoho that stipulates we’ll eliminate our sugar program in return for foreign countries eliminating their market-distorting subsidies.
THAT would be a sweet deal for everybody!