How The Cookie Crumbles In the Sugar Program

Inside Dakota Ag

Maybe sugarbeet farmers succeed in Washington, D.C., not just because of the money they contribut, but because the story they tell rings true.

Published on: June 6, 2012
I get razzed by some of my colleagues about the U.S. sugar program. They argue that the only reason the U.S. restricts imports is because the sugar growers in the Red River Valley and elsewhere spend a lot more money lobbying Congress than other commodity groups. Protection money, they call it.
True, the political contributions might give farmers who grow sugar access to tell their story, but maybe their story rings true.
Consider this:
Cheryl’s, a $50 million mail order cookie business owned by 1-800-Flowers, recently weighed in on the sugar program. It told lawmakers that restricting imports of sugar from foreign countries hurts mom-and-pop cookie makers because they have to pay more for sugar and it raises the price of cookies.
Cheryls cookies are nearly half sugar, but in a gift package the company sells for $40, they only paid 48 cents for the sugar.
Cheryl's cookies are nearly half sugar, but in a gift package the company sells for $40, they only paid 48 cents for the sugar.
The American Sugar Alliance weighed Cheryl’s cookies and found that they were 50% sugar. But at today’s market prices the sugar in Cheryl’s $40 “classic gift tower” that ASA purchased cost 48 cents.
“Even if the Cheryl’s got its sugar free and passed along all the savings (something history has proven doesn’t happen), then consumers wouldn’t even save a buck on such a big purchase,” the Alliance contends.
With sugar at 1.2% of their product’s cost, it’s pretty hard to believe claims that sugar prices are really harming profit margins, especially given Cheryl’s rags-to-riches story, according to the ASA.
Cheryl’s grew from a single Ohio cookie store in the ‘80s into the household name it is today.
The opposite was happening to the sugar business in in the same period, ASA says.” From 19985-2008, more than half of all U.S. sugar plants closed their doors, 54 in all, leaving more than 100,000 people without work.”
In Cheryl's home state of Ohio, the entire sugarbeet industry was lost, mostly due to low sugar prices.
It’s great that sugar farmers’ customers, like Cheryl’s, have done well. If bakers, candy and beverage companies didn’t make money, sugar farmers wouldn’t make money. But they shouldn’t lie about how the sugar program is putting such a burden on their profits and forcing them to charge higher prices.
“After all, if sugar prices truly were such a profit-making roadblock,” the ASA asks, “why does Cheryl’s sugar-free version of the $40 “classic gift tower” of cookies cost $50?”