New Study Shows the Sweet Truth in Classic Farm Policy Debate
Opponents of farm policy deal with lawmakers and the general public a lot differently than the family farmers they are attacking.
Agriculture’s critics don’t spend too much time analyzing data or providing any semblance of balance or perspective. Instead, they create a narrative that supports their view of the world, cherry pick a few numbers to support it, and use a whole lot of assumptions, generalities, and sweeping statements to peddle influence.
Consistency isn’t their strong suit either. One day, they will attack U.S. farm policy for making commodity prices too high and hurting low-income families with bigger grocery bills. The next, they’ll criticize farm policy for lowering global prices and harming impoverished farmers in developing countries.
One classic case study of anti-farmer propaganda is sugar policy. For decades, sugar policy’s biggest detractors – who are bankrolled by the Big Candy lobby – have spun a simplistic tale of economic pain created by the Farm Bill.
U.S. sugar policy, they say, is driving up food prices, forcing U.S. food makers overseas, increasing unemployment, and harming the U.S. economy.
But this week, sugar policy’s antagonists received an old-school academic smack down from an unlikely place: the dean of the University of Maryland’s business school.
Since the current U.S. sugar policy took hold in 2008, candy companies and producers of other sugar containing products (SCP) have added jobs, increased production, and boosted profitability, Dr. Alex Triantis found in a recent study. In other words, the numbers showed the exact opposite of what agriculture’s critics are claiming on Capitol Hill.
“During 2009-2014 – a period that included a U.S. economic recession and unusually high world and U.S. sugar prices – SCP industry jobs rose by 3 percent while non-sweetened-food industry jobs were flat,” he wrote.
That’s not all. Dr. Triantis also explained: “The SCP industry has been faring very well under current U.S. sugar policy. SCP companies have experienced strong revenue growth over time. These companies have high profitability and high returns on equity, even when sugar prices increase.”
He also compared the stock of sugar policy’s critics (the nine biggest SCP companies to be exact) to other publicly traded companies. Among his findings:
- Share prices of these SCP companies more than doubled over the past 15 years, while the S&P index only increased by 50% during that period.
- Revenues grew by 131% over the past 15 years, almost double the growth rate for the rest of the U.S. economy during this period.
- Net profit margins during the past 15 years were 37% higher than the average for all U.S. public companies, and 67% higher than the average for the overall food processing industry.
- Return on equity averaged 25% higher than that of the overall food-processing industry and double that of the total U.S. economy during the past 15 years.
Again, the exact opposite of what agriculture’s detractors are telling lawmakers. As for claims that sugar policy has driven away candy jobs and been a drag on the economy, Triantis explained:
The SCP industry is thriving, and job losses in this industry over the past two decades are no worse than in non-SCP food manufacturing industries. Rather, they reflect productivity gains and other factors unrelated to sugar prices. Furthermore, if U.S. sugar policy were to be altered in any significant way, producer prices would fall, a large number of jobs supported by the sugar industry would be lost, and there is no evidence that consumers would benefit through lower retail sugar or SCP prices.
Sugar producers have been making these points for years. To push back on the false allegations of candy company flight, the American Sugar Alliance has even dedicated a website to the Big Candy lobby that chronicles confectioners’ numerous expansion projects. Of course, that hasn’t kept sugar policy’s critics from continuing to spin fairytales of economic hardship on Capitol Hill.
And despite Triantis’ comprehensive and indisputable evidence, we doubt they’ll see the light this time either. After all, circulating half-truths and misinformation is how agriculture’s opponents have operated for decades, and they’re not about to let pesky things like facts and expert analysis get in the way.