Many US candy and confectionery manufacturers are moving production to other countries, arguing that high raw sugar prices are putting them at a distinct disadvantage against foreign competitors.
<STRONG>Brach Confectionery Co, Bob’s Candy and Adam & BROOKS Inc are among the many companies who argue that they have been forced to relocate their operations because of high raw sugar prices. Figures produced by the US department of agriculture show that the percentage of foreign produced non-chocolate candy on the domestic market has increased steadily over the last few years. In 1997, 11.7% was manufactured abroad. A year later it was 13.7% and in 1999, 17% of the 3.3bn lbs of non-chocolate candy consumed in the US was manufactured in other countries.
The price of raw sugar in the US has risen dramatically under the government’s sugar policy, and it now amounts to over double that in other countries. While world raw sugar prices are currently around 8.4 cents a pound, in the US confectionary manufacturers must pay up to 21.5 cents per pound.
The US sugar policy is widely believed to need adjustment. Harsh import barriers, quotas and tariffs, have meant that prices on the domestic market have not fallen with increased supplies. The government has meanwhile been left with a large stockpile of the commodity after defaults were issued on government loans to farmers.
And because several US refineries have been forced to shut down, and many are up for sale, the situation is also costing thousands of US jobs. The website of the Candy Institute, an economic and community-development group, details the move of one of the US’ largest producers to South America. Relocating Brach Confectionery’s production facilities to Mexico or Argentina will result in the loss of 1,500 US jobs.
Others maintain meanwhile that the companies on the move are merely using raw sugar prices as a cover up for the real motivation of finding cheaper labour and more favourable foreign exchange rates. In Mexico, wages amount to about a tenth of those paid in the US, and many foreign currencies are weaker than the US dollar. Based in Washington, the chairman of the American Sugar Alliance, Luther Markwart, commented: “you don’t move your businesses based on one input commodity.”