The Sugar Beat
In 2006, the Department of Commerce (DOC) released a study on sugar policy’s effect on jobs in the sugar-producing and sugar-using sectors. That questionable study—based on data from 1997-2002—was widely dismissed during the 2008 Farm Bill debate. Now, it has resurfaced, and some are trying to pass off findings, which are more than a decade old, as new gospel.
So how accurate is the dated study, and why was it so quickly dismissed when it was first released?
DOC Used Bad Data: The DOC claimed there were just 2,000 sugar jobs in the country, yet USDA agriculture censuses from 1997 and 2002 show there were 6,000 to 8,000 sugar farms during that period. Sugar farmers are efficient, but 2,000 people can’t manage 8,000 farms. And who was processing, packaging, and delivering sugar to customers?
Last year, economists who specialize in global sugar production and processing put total U.S. sugar jobs—from farms to factories—closer to 142,000. And that’s after the industry lost 109,000 jobs since 1994 because of low sugar prices and escalating overhead costs.
It’s Not the Sugar: Even though major U.S. manufacturers of all kinds were leaving the United States during the same period for cheaper labor, lower taxes, and lax regulations, the DOC assumed all food-manufacturing jobs lost were a result of just sugar prices. And it based its job loss figures on press reports instead of hard data. The so-called study essentially was a clipping service of cherry-picked news stories.
Even fleeing food manufacturers challenge that assertion. One major manufacturer that fled Chicago workers admitted to the Associated Press years later the move “was based on lots of factors and could not be pinned specifically on sugar pricing.”
Sugar Users Actually Expanded Production: Buried deep in the DOC study was one bit of unreported information that completely undermines its whole production-killing hypothesis. Turns out the DOC found that domestic production of sugar-containing foods grew by 10.5% over the period it studied—more than double the growth of non-sweetened foods.
According to U.S. Census data, this growth has continued, and since the 2008 Farm Bill, U.S. confectioners have boosted production by another 2.5%.
So what have economists had to say on the subject since that dated study was completed?
Job Flight Has Stopped: Peter Buzzanell, a former USDA official and expert in the confectionery business found in 2009 that candy-company flight to low-wage countries “has run its course and that trend of job loss may be reversing itself.”
Sugar Was Never the Culprit: He also noted that previous relocations had more to do with labor costs than sugar.
“Independent site-selection research for manufacturing firms puts labor at 58-74 percent of overall operational costs,” Buzzanell found. “Sugar prices, meanwhile, varied modestly from country to country.”
Of course, if you don’t believe Buzzanell’s study, look no further than the candy companies’ own announcements in recent years, which are full of tales of domestic expansion and job growth.
Here’s just a sampling of the recent good news…and there’s a lot more where that came from:
“Topeka received some sweet news when Mars Inc. selected the capital city of Kansas for a new $250-million, 200-worker chocolate factory.”
Site Selection magazine, November 2011
“Richardson Brands in Canajoharie, N.Y., which makes 80% of the world's rock candy, has seen sales rise 5% a year during the economic downturn and expects to add 80 jobs in 2012.”
WRGB-TV Albany, August 23, 2011
"The Hershey Company West Hershey plant expansion will add 340,000 square feet to the existing production plant. ‘We’re building for the next 50 or 100 years,’ said Wade Latz, vice president-global engineering operations, as he toured the facility Wednesday. ‘This is a quarter-billion dollar investment.’”
The Patriot-News, September 22, 2011
“The Wrigley Manufacturing Company will add 54 new jobs locally when a $409,244 expansion of its existing facility is completed.”
Nooga.com, December 5, 2011
“BestSweet, a confectionery products manufacturer, is investing $6.4 million over three years to expand its Mooresville [NC] operation… The company recently invested $14 million in its Mooresville operation to add 40,000-square-feet in manufacturing space, and a 140,000-square-foot warehouse and distribution facility. The company also recently added 70 new jobs.”
The Charlotte Observer, July 21, 2011
“Spangler Candy Co. is embarking on a $400,000 expansion of its factory in northwest Ohio to make more candy canes… The company will add 20 to 30 jobs to handle the extra work.”
Columbus Business Journal, August 31, 2011
“The founder and chief executive officer of candy maker and marketer Promotion in Motion Inc. plans to add as many as 100 jobs at the company's Somerset [NJ] factory by early 2013 to keep up with anticipated growth.”
NorthJersey.com, June 5, 2012
“The Chocolate Chocolate Chocolate Company soon will have more space space space.
The St. Louis-based chocolatier has announced plans to open a new state-of-the art 30,000-sq.-ft. chocolate factory in the heart of its hometown later this year. Their new facility will double production on the first day and will increase production tenfold, the company says.”
CandyIndustry.com, May 2, 2012
“Confectionery job growth trumps green energy job growth in Michigan.”
Michigan Capitol Confidential, May 8, 2011
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