By
Stephen Franklin The impending
shutdown of the huge Brach's candy factory on the West Side
has plunged Mayor Richard Daley into a war with the nation's
powerful sugar lobby, which critics blame for
inflating prices and prompting an exodus of candymakers from
the U.S. But Daley's
fight to keep more confection industry jobs from fleeing the
city is shaping up as a battle on another front. It is a
classic Downstate-Upstate showdown, pitting Illinois
corn farmers and agribusiness conglomerates against
thousands of blue-collar candy workers in
Chicago. The politics
of sugar are complicated and emotional, and nowhere is that
more evident than in Illinois. While
Chicago is the nation's candy capital, producing more
candy than any other community, Illinois is also the biggest
producer of high fructose corn syrup, a sweetener that costs
much less than refined sugar and is used as a sugar
substitute in soft drinks and many other products--though
not in candy and bakery goods. As sugar
prices grew over the years, corn sweeteners became a cheap
substitute. Nowadays, high fructose sugar has gained a
market niche that it is unlikely to surrender even if sugar
prices were to fall. But many
Downstate farmers and agribusiness interests are reluctant
to let down their guard, so they back the federal price
support program for U.S. cane and sugar beet growers that
makes sugar at least twice as expensive in this country as
it is in the rest of the world. Daley and
other critics claim that's unfair to consumers and candy
workers, who experts say numbered 13,000 in Chicago five
years ago but whose ranks have thinned to 10,000. "It's time
to end regulations that stifle the free market and cause
a loss of good jobs in Chicago," Daley said in March as he
vowed to rally the state's congressional delegation
to fight renewal of sugar supports. But Sen.
Richard Durbin (D-Ill.), a Downstate native, said the
situation is far more complex. "It's a
difficult vote in Illinois because you have important people
on both sides of the issue," said Durbin, who has backed
sugar supports but says he is reviewing the
issue. The issue is
gaining new urgency, and not just because of the closing of
Brach's, which is expected to take about three years and
eliminate 1,100 jobs in the city. Congress is beginning to
review the entire structure of farm supports, which have
been lifted on most commodities but remain on sugar and a
handful of other items grown in states with strong political
lobbies. Nationwide
about 65,000 people work in the candy industry, according to
the National Confectioners Association, founded in
1884 in Chicago. On the other
side of the issue, the Washington-based American Sugar
Alliance, the major trade group for the sugar growers,
estimates that about 420,000 people are tied directly or
indirectly to the production of sugar and corn
sweeteners. But critics of
the sugar program, such as U.S. Rep Dan Miller (R-Fla.),
said such numbers are highly inflated and point out that the
sugar cane and sugar beet industry by themselves employ just
55,000 people. Sugar cane growing is concentrated in a
handful of Southern states and Hawaii, while most sugar
beets are grown in the upper Midwest and the Plains
states. The
government props up the cost of sugar with quotas that
prevent the import of a large amount of foreign sugar as
well as with loans to sugar growers. If the domestic prices
drops below a pre determined floor, the farmers forfeit
their sugar to the government, something many of them have
been doing lately. Although
prices fluctuate, the effect of the government program
typically doubles the wholesale cost of domestic sugar
beyond world prices, and sometimes more. Currently, sugar
costs 9 cents a pound on the world market, but the
government sets the domestic price for raw cane sugar at
18 cents a pound and 22.9 cents for refined sugar
beets. Last year, the
government bought more than 1 million tons of sugar for
$435 million, and it now pays $1.4 million monthly to store
the sugar, according to the U.S. Department of
Agriculture. Keeping the
sugar industry afloat costs Americans in other ways
too. The U.S.
General Accounting Office has estimated Americans paid an
extra $1.9 billion for their sugar in 1998 because of
supports. But sugar growers disagree, saying the government
incorrectly assumed that candymakers would pass along the
savings if sugar prices dropped. Candy
officials such as Russ Lyman, president of Peerless
Confection Co. in Lincoln Park, say that competition would
force them to cut costs if their sugar bills
dropped. Sugar makes up
as much as 50 percent of the raw material cost of the 350
varieties of hard candy made at Lyman's company, which
opened in Chicago in 1914. The two sides
also swap complaints about each other's lobbying clout in
Washington. The sugar
growers say their foes' political action committees handed
out $2.1 million in 1998. But those on the side of sugar
reform dispute the list of givers, noting that many of the
PACs listed are large food companies, which have not played
any role in pushing to change the law. The sugar
reform groups point to figures from the Center for
Responsive Politics, a Washington based research group,
that show sugar growers' PAC donations added up to
$1.8 million in 1998. "We came close
in 1996 and I am optimistic now," said Miller, who led a
battle to phase out the support program a few years ago that
fell nine votes short of passage in the House. But Big
Sugar is no pushover in Washington, as numerous
lobbyists and politicians explain. It has solid loyalty
among farm-belt lawmakers eager to protect hometown
interests. And so, politicians swap votes with sugar for
votes propping up government programs affecting pork or
tobacco or corn products. They are careful not to harm
another subsidy Jack Roney, an
economist with the American Sugar Association, said
sugar growers are willing to face global competition as long
as other countries drop protections for their sugar
industries. "What we are saying is, `Let's keep these import
controls until others have dismantled theirs and then we'll
join them,'" he said. Sugar matters
in Illinois for another reason. Blaming the
nation's high sugar prices, 12 of the nation's 22 cane sugar
refiners--including one in Chicago--have gone out of
business in the U.S. since the sugar program began in
1981. One firm
suffering today from the profit squeeze faced by these
refiners is the Decatur-based arm of Tate & Lyle. The
British firm has put its Western Sugar Co. subsidiary up for
sale, and according to news reports, isalso looking for
buyers for its other major refining arm, Domino Sugar
Co. Ironically,
the company is caught in a tricky middle ground over the
issue. While Tate
& Lyle officials condemn the current program for hurting
their sugar processing business, they are loath to urge
killing it overall. That's because they also own
Decatur-based A. E. Staley & Co., a major producer of
high fructose sugar. Even if the
sugar program is changed in favor of the refiners and
candymakers, some say that may not stem candy companies'
flight. Sugar costs
are not the "biggest overall factor, but they are a factor,"
said Friederika Kaider, director of the Candy Institute, a
community-based group founded several years ago to help stop
Chicago's loss of candy industry jobs. A major issue
for some candymakers is labor costs, which they can lower
by moving overseas or buying from foreign producers, she
said. But Sal
Ferrara, president of the 93-year-old Ferrara Pan Candy Co.
of Forest Park and chairman of the National Confectioners
Association, insists that it is the high sugar costs
that have led him to move 40 percent of his firm's
production to Mexico and Canada. Ferrara, who
expects more flight, said: "By next year, 50 percent will be
over the border."
Chicago Tribune
May 7, 2001