Fuzzy Math Print
The Sugar Beat

Last month’s Sugar Beat newsletter featured a quote from the National Confectioners Association’s (NCA) website that the $30 billion candy industry spends “nearly $100 million” on sugar—its most important ingredient—per year.
In the article, Jack Roney, an economist with the American Sugar Alliance (ASA), noted that this figure represented a paltry one-third of 1 percent of candy makers’ revenues and sounded a little low.
“I would have thought that figure would have been closer to $1 billion,” he explained in the article, “which is still miniscule and just 3 percent of confection revenue.”
Roney was right, and within minutes of the newsletter’s printing, NCA corrected its website and changed the erroneous $100 million figure to $1 billion.
Now Roney and his colleagues have noticed other inaccuracies being touted by confectioners.
The Sweetener Users Association (SUA), a lobbying group made up of many of NCA’s members, recently sponsored a controversial economic study depicting life for sugar producers and consumers if no-cost U.S. sugar policy were eliminated and subsidized imports flooded the market.
Under such a scenario, the SUA study states:
  • U.S. sugarcane millers’ net returns would drop by 113 percent—or, go negative. Yet, sugarcane production would hold steady, insinuating that producers would happily produce a product despite losing money.
  • U.S. cane refining margins would fall by 57 percent, but cane sugar refiners would nonetheless increase output by 24 percent and add jobs.  Since refineries are already producing at, or near capacity, this would presumably mean the construction of new multi-million-dollar facilities to produce a money-losing product.
  • U.S. candy companies would pass 100 percent of sugar cost savings to grocery shoppers, even though previous sugar price declines have not equated lower prices at the grocery store. Put another way, candy companies would radically change business practices, shun higher profits, and lower the same candy prices that they’ve steadily increased for decades.
  • A chocolate and confectionary-product price decline of just 1.03 percent would increase chocolate consumption by as much as 58 percent and other candy consumption by as much as 27 percent, while candy imports would all but cease. Put another way, if the price of a U.S.-made chocolate bar dropped from $1.00 to $0.99, demand would soar by about 50 percent, and we would virtually stop importing fancy European chocolates.
“The Sweeteners Users’ farfetched conclusions are based on an econometric model that is utterly divorced from reality,” Roney concluded. “It doesn’t even pass the common-sense test, and one has to question the quality of any conclusions candy companies are circulating on Capitol Hill.”
Lawmakers, Roney says, should look at the hard facts in front of them now instead of off-the-wall economic theories.
“Current sugar policy costs taxpayers zero dollars and since it’s been in place, production of candy in America has increased, new candy manufacturing facilities have been built in the U.S., and jobs have been added,” he concluded. “Sounds like a success story to me.”
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