Hershey, Environmentalists Push to End Sugar Subsidies

With Easter on the horizon, consumers are rushing out to buy their last-minute chocolate bunnies, jelly beans, and marshmallow Peeps.

What they probably don’t know is they’re paying a secret tax for these products, thanks to a Depression-era program of sugar supports and subsidies.

“We believe leaving these subsidies in place causes more job risk to the U.S. economy than removing them,” said Jeff Beckman, a spokesman for the Hershey Co., based in Hershey, Pa.

Beckman points to Agriculture Census data that show roughly 4,500 jobs created through sugar beet and cane farms, plus an additional 18,000 jobs in the sugar processing industry. Compare that, he said, to the 600,000 jobs in the food and baking sector, which are harmed by the subsidies.

Candy companies and food manufacturers have been trying to strike sugar supports from the farm bill for about 80 years, with no success. They could have a powerful new ally with environmentalists, however, who view the sugar industry as a threat to both air and water quality.

“Sugar needs to be a good neighbor, and the fact is the federal sugar program is directly responsible for taking a massive environmental toll in Florida,” said Cris Costello, an organizing manager for the Sierra Club.

The Sierra Club has received funding from Bloomberg Philanthropies, the charitable organization founded by Michael Bloomberg, the ultimate owner of Bloomberg Environment.

Together with major industry players such as Hershey, the American Beverage Association, environmental groups also are pushing for the passage of the Sugar Policy Modernization Act (H.R. 4265, SB. 2086), a proposal that seeks to reform the program to bring sugar prices closer to the world market rate.

Thirsty, Dirty Crop

South of Lake Okeechobee, the Everglades Agricultural Area in Florida has converted 1,000 square miles of mostly wetlands into fields to grow vegetables and sugar cane. Especially sugar cane.

Before sugar cane, water flowed freely from the Kissimmee River into the lake, and then south into Everglades National Park and Florida Bay—what environmentalist Marjory Stoneman Douglas called the flowing “river of grass.”

“Big sugar is physically and politically blocking the flow of water from Lake Okeechobee,” said Kimberly Mitchell, executive director of the Everglades Trust, an environmental advocacy group.

Mitchell told Bloomberg Environment that the powerful sugar lobby has repeatedly blocked plans to convert government-owned land for wetland conservation, while also diverting more than half the water the Everglades needs to remain healthy.

“Because of where they’re situated, they [sugar farmers] get as much free water as they want—and when there’s too much water, it gets shunted to other parts of the state to keep their fields dry,” said Mitchell.

The water that does get through she says is often laden with marsh-killing nitrogen and phosphorus, which contributed to a spate of green algal blooms, including 2016 resulted in a state of emergency for four counties.

Everglades restoration is not the only issue animating environmentalists. Preharvest cane field burning is a source of air pollution, particularly in poorer, inland communities.

“In South Florida, if the wind is blowing west toward Mar-a-Lago cane burning permits are not allowed,” said Costello. “But, if the wind is blowing east toward Pahokee, or Belle Glade, it’s ’burn away.’ It’s an outmoded practice that just isn’t necessary. They do better in Brazil.”

Farmers Push Back

But sugar cane farmers claim they have taken steps to address the air pollution concerns.

“We have an extensive air quality monitoring network to make sure emissions limits aren’t exceeded,” said Barbara Miedema, vice president of communications for the Sugar Cane Growers Cooperative.

Miedema told Bloomberg Environment that the air quality in the Everglades Agricultural Area is actually much better than urban areas.

Historic El Nino rains and Hurricane Matthew in 2016 had a greater impact on algal blooms than sugar farming, according to Miedema.

“Leaks from septic tanks, combined with high temperatures, are the real culprit,” she said.

As for previous decisions to drain central wetlands in favor of agriculture, Miedema said it’s not fair to blame farmers whose livelihoods depend on the lands they’ve held for generations.

“If you want to go to predevelopment Florida, back to the 1800s, there wouldn’t be a Gold Coast or Miami-Dade County,” she said. “They wouldn’t have built the Herbert Hoover Dike around Lake Okeechobee to prevent people from dying in floods.”

Peeps and Free Markets

As it’s written into the farm bill, sugar farmers benefit from Department of Agriculture-backed loans, in addition to price supports and import limits on foreign sugar, which translate into increased costs, and less employment, critics said.

“Our number one ingredient in our Peeps, Mike and Ike, and Hot Tamales brands is sugar,” said Matt Pye, senior vice president of sales and marketing for Just Born Quality Confections, based in Bethlehem, Pa.

“U.S. sugar is about 40 percent higher than the rest of the world, which puts us at a competitive disadvantage. It inhibits our ability to drive innovation and reinvest in our family-owned business,” Pye told Bloomberg Environment.

The global price of sugar is around 13 cents per pound, compared to about 31 cents per pound in the U.S., according to USDA data from 2017. Manufacturers claim the modernization act aims simply to level the playing field, and discourage American companies from moving abroad, to better access cheap sugar.

“The modest reforms called for in the Sugar Policy Modernization Act will have little, if any, impact on sugar growing and processing jobs, but will help keep food manufacturing jobs in the U.S. by allowing the cost of a key ingredient to be more competitive,” said Hershey’s Beckman.

Two Cents for Every Bar

But representatives for the sugar lobby said candy and baked-goods manufacturers aren’t being honest when they say the price of sugar is driving up costs.

“This whole notion that if sugar is less expensive, consumers are going to get a break, is just not accurate,” said Phillip Hayes, a spokesman for the American Sugar Alliance.

Back in the 1980s, a candy bar cost about 35 cents compared to $1.49 today. All while the price of sugar has barely changed since then. “There is about two cents’ worth of sugar in a candy bar, but they want to tell you that sugar is driving up costs?” Hayes said.

Hayes told Bloomberg Environment that supports for sugar in the farm bill have kept the price of sugar stable, allowing the confectionery industry to expand tremendously. All while supporting tens of thousands of farming jobs, not just in Florida, but also sugar beet farmers in places like North Dakota and Colorado.

“This Sugar Policy Modernization Act is nothing more than a ‘sugar farmer bankruptcy bill,’” he said.

“Sugar farmers rely on USDA loans, the same as the corn, wheat, and soybean guys, who also benefit from government support.”