(Russell Nemetz | Land & Livestock Report) – Life is sweet and profits are up for American confectioners, in part due to the reliability of America’s sugarbeet and sugarcane growers and the stability provided by U.S. sugar policy.
A new study by the University of Tennessee did the math on candy profits: Over the past 10 years, candy corporations posted high profits and a nearly double the return on investment compared to an average publicly traded U.S. firm.
In addition to big profits, Big Candy is projecting big growth. The National Confectioners Association projects that U.S. confectionary sales will reach $44.9 billion by 2026, a more than 20% increase from 2021’s $36.9 billion in sales.
“It’s insulting that multi-billion-dollar corporations are posting high profits while crying poor to Congress as they try to dismantle the policy that protects my farm,” said Nate Hultgren, a sugarbeet grower in Minnesota and President of the American Sugarbeet Growers Association.
“Family farms like ours across the nation work hard to provide candy and other food companies with sugar, sometimes working 24 hours a day to get the job done. Farming is volatile, unpredictable, and expensive. Farmers are essential to the nations’ food security.”
The study analyzed the profits and risk of several major sugar-using firms and compared their financial returns and risk metrics to other agri-businesses and a benchmark of all U.S. firms.
The high profitability and low volatility of the industry can be attributed, in part, to U.S. sugar policy, which provides a reliable supply of domestically produced sugar and the flexibility to ensure that supply always meets demand.
The median return on investment for sugar-using firms over the past 10 years was nearly double that of all firms (11.3% vs. 6.1%) and almost double compared to other agribusiness companies (11.3% vs. 6.6%).
Over the past 20 years, sugar prices in the U.S. have been more stable than sugar prices in the volatile world dump market.
“Big Candy says that purchasing American-made sugar is a financial burden and they need unlimited cheap foreign sugar to survive, but that’s just not true. Just look at their profits! If our critics were successful in weakening the current sugar policy, my farm might not survive. Who will candy companies turn to when American sugar farmers have been driven out of business?” said Bryan Simon, a sugarcane grower in Abbeville, LA.
U.S. sugar policy supports U.S. farmers by providing loans to store sugar, which are repaid with interest, and leveling the playing field for American producers while providing preferential market access to nearly 40 countries. The U.S. is the third largest importer of sugar in the world.
U.S. sugar policy is authorized in the Farm Bill and is designed to cost taxpayers nothing.