CANDY PLAYS PIVOTAL ROLE IN U.S. ECONOMY

Published June 12, 2013 in Food Product Design

                                                                                           Chocolate Heaven

GRAND FORKS, N.D.—Candy plays a pivotal role in the future of the economy, reported Agweek. Shares of sugar-containing product (SCP) members have risen more than 300% since 2000, according to findings of 10 large U.S. publically traded companies that produce highly sweetened products, conducted by researchers at the University of Maryland.

The study showed the majority of that 300% has come since 2009 when other stocks were struggling, and compared with an almost flat S&P index. SCP revenues increased 45% since 2004, which is 50% higher than the growth of the rest of the economy. Also, return on equity has outpaced the U.S. economy by 115%, and net profit margins during that period are 17% higher than the average for other publically traded companies.

This sweet profit center has remained a large "secret" kept by these sugar-using industries over the last few years, diverting news headlines and media attention in order to benefit politically at the expense of America's sugar farmers, noted Agweek. However, such actions may have public policy implications.

Led by the National Confectioners Association (NCA), large candy companies claim the U.S. sugar policy has caused them financial hardship in the past few years, asking Capital Hill to mandate oversupplies on the U.S. sugar market in order to keep ingredient costs at artificially low levels. However, that doesn't mean savings will go towards lowering food costs.

According to the study, significant alterations to the sugar policy, as the confectioners advocate, would result in a large number of jobs that are supported by the sugar-producing industry to be lost to foreign subsidization. Further, "there is no evidence that consumers would benefit in the form of lower SCP prices, so there'd be no economic upside," the researcher told Agweek. Such circumstances have been observed in the European Union, which altered its sugar policy in 2006 in favor of greater import dependence. Since then, 120,000 E.U. sugar jobs have been lost and sweetened product prices increased 20%.

The entirety of this economic picture is important to consider as Congress debates the Farm Bill. For other news on the Farm Bill visit Agricultural Industry Critical Of Farm Bill Extension.

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