The Great Sugar Shakedown

The US candy manufacturing industry includes about 1,600 companies with combined annual revenue of about $20 billion.

Major companies include The Hershey Company, Mars, Tootsie Roll Industries, and Russell Stover Candies. The industry includes three major segments: companies that make chocolate from beans, companies that use purchased chocolate to make candies, and companies that make nonchocolate candy.

http://www.hoovers.com/industry/candy-manufacturing/1351-1.html

Nothing I can find suggests a major job loss to Canada though.

Indeed, I found the article that "fact" came from and it appears to be bogus. (the loss of jobs was supposedly from Brachs saying it was moving to Canada back in the early 90s, but instead Brachs got sold and the parent company didn't move.)

Oh, and there are 13,000 sugar beet farmers in the US, not 1,300.

Yes, and that's why I wrote: You would be using grossly wrong assumptions.

 

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Why on earth are you in opposition to me on this?

MF’s Corzine Ordered Funds Moved to JP Morgan

Oh I know, he meant Jesus Christ :bugeye:

You can listen to his testimony in front of congress and the way he answered question such as: I didn't intend to blah blah blah bullshit.

One more time, money was taken out of SEGREGATED accounts to cover Corzines' bet he made on the Euro and lost because he's a douche.


Just watch: Not a slap on the wrist.

Back to sugar: Did you listen to the documentary yet? Or did you just set yourself in opposition. I don't mind you playing devil's advocate IF you actually listened to the link.


I think everyone should stop and think about this logically. Imagine if suddenly someone made a machine that could turn air into sugar and thus sugar became so utterly cheap that no one could make money farming it. According to the logic here, that person should NOT be allowed to give his sugar away cheaply. This makes absolutely no sense (other than to maybe a Keynesian retard). When sugar is free, resources are freed up to do other productive activities in society. So, free sugar makes society BETTER not worse. Tariffs and subsidizing sugar would make society worse not better. Why this is so hard to understand is beyond me.


Lastly,

In 1913, the Sixteenth Amendment to the United States Constitution made the income tax a permanent fixture in the U.S. tax system.
The Federal Reserve System was created on December 23, 1913 with the enactment of the Federal Reserve Act.
Income tax that could only be paid using the new Federal Reserve Notes was the governments way of forcing Americans into this abhorrent system. Christmas eve - talk about bullshit.

 

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So how much actual sugar is in a typical chocolate bar anyway?

http://wiki.answers.com/Q/How_much_sugar_is_in_a_chocolate_bar

Assuming the above figures are correct...40 grams of sugar works out to 0.088 pounds.

So the sugar in your mars bar costs approx TWO CENTS.

 

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That's a lot of money when you're moving 100s of millions of chocolate bars. Not to mention sugar is used in just about everything we eat. One could also think of it like this: if it were truly insignificant, then we wouldn't need protectionist policy. Right? I mean, why bother..... if it's minuscule and insignificant?

Again, imagine if sugar were made from air and was nearly free. This would be good for society as limited resources used to grow sugar could be utilized productively elsewhere. As such, putting a tariff on sugar only harms our economy. It doesn't help us. It's just helping to give a semi-monopoly to sugar farmers.

It doesn't strike you as odd that there's laws AGAINST dumping!?!?! IOWs someone is willing to work for pretty much FREE and give you their labor and this is BAD for you?!? When such bizzaro logic becomes the norm, you know there's something fundamentally and structurally wrong with the monetary system. This is why we have douche bags like Krugman suggesting the utterly horrific nuclear meltdown in Japan, was a "good stimulus" for their economy. THAT'S how far these dipshits have climbed up into their own rectums.

Your video The Broken Window Fallacy states this clearly. It can be easily applied to this sugar example. Wouldn't you agree?

 

Protectionist policies are usually established by lobbyists of some minority who want to protect themselves.

It is not 'insignificant' to them.

But thats not WHY the government should comply.

The feds should comply because protectionism benefits the nation as a whole.

 

To break any monopoly only TWO competitors are required...in this case domestic competitors.

Same goes for a cattle auction...only two bidders are needed to bump up the price.

MONO means ONE.

 

The Broken Window Fallacy helps us to understand that money saved by the domestic sugar consumer will be spent somewhere else in the domestic economy.

And also that domestic sugar producer's income will also be spent within the domestic economy...including taxation.

The important thing here is to focus on the quantity of wealth...and where it goes.

 

Check this out: UK Government to force pension schemes to purchase it's dud Never Ending Loans - which payout in 2112.

That was not a typo, they pay out in 100 years and assuming there is zero inflation you can make a modest amount of money.

Welcome to Joe's recovery A-La Central Bank + Big Government style.

 

I don't understand your answer. How is near-free sugar related to a monopoly? Even if it was a monopoly, so what? It's free. It's like saying Skype is BAD because I don't pay for it. Go on ahead and make a Skype competitor - maybe I'll not pay for that one too :shrug:

I just don't understand your reasoning here.

 

Hmmmm.... I'm not sure what you mean by "wealth". How is wealth different from currency and money?

Also, IF you're worried about "money" then how would this scenario play out in an America free from the USD and able to create private currencies - like it was pre-1913.

 

Because I produced a report that came out 5 days AFTER that report that shows that Corzine was told the money he ordered moved didn't come from Customer Accounts. So YES, he ordered the move AFTER he was assured it was from House funds.

http://dealbook.nytimes.com/2012/03/25/e-mail-to-corzine-said-transfer-was-not-customer-money/

No, at a minimum this will cost him millions.
If he did something illegal, then he will likely serve jail time.
So far the first is nearly certain, the latter is still unresolved.

I told you, I don't watch You-Tubes, unless video is important to the story. Clearly for sugar that's not the case. You have a point to make, make it.

It's not hard to understand, it is just wrong, since we aren't talking about free sugar being made here.

Not all workers in the world have the same set of rules and all make the same level of pay and the pay the same level of taxes.
And so we have a valid national reason to keep the production of most of the sugar we use in the US, even if we can't grow/harvest cheaper sugar cane using barely paid workers with no benefits. Yes our consumers pay 1/2 cent more per candy bar, but that money stays in the US, supporting the 13,000 growers and many refiners of sugar (and the associated jobs), instead of flowing out of the US.

Yeah, the country has done SO badly in the last 100 years.

NOT

 

And if you compare the price of domestic sugar to the cost of imported sugar, the cost is ~1/2 cent more per candy bar to use domestic sugar.

So no, it's not as Michael suggested, a lot of money, even at hundreds of millions of candy bars.

 

Nonsense. And branded as such my almost all economists as they understand the benfits of free trade. Read at least the summary below.

Unfortunately, I cannot view adoucette´s price graph* but from Page 5 of Hersey´s Annaul report to SEC for year ending 31Dec11, I read:
“The price of sugar is subject to price supports under U.S. farm legislation. This legislation establishes import quotas and duties to support the price of sugar. As a result, sugar prices paid by users in the U.S. are currently substantially higher than prices on the world sugar market. In 2011, sugar supplies in the U.S. were negatively impacted by government import restrictions, strong demand and high world market prices. As a result, refined sugar prices increased significantly compared to 2010, trading in a range from $0.57 to $0.64 per Pound” is this about what your graph states?

*It seems my ISP is removing from all data streams coming to me everything between [ img]....[/img] to cope with their inadequate capacity. Until a few days ago, they used “rolling blackout” and then I would do something else when my part of their “service” area was not being served.

On page 8 I read: “The percentage of total consolidated net sales for our businesses outside of the United States was 15.6% for 2011, 14.6% for 2010 and 14.3% for 2009.” I.e. Hersey is growing faster outside of US than in the US. They built their large producton plant in São Roquo, SP, Brazil in 2002. I don´t think it is yet exporting back to the US as the Brazilian population demand for Hersey products is still rapidly growing, but at some point in time they will as production here is cheaper than in the US.

Note to Carcano: Perhaps in a decade or so when Hersey is either bought by Nestle (or another chocolate producer with lower costs) or simply ceases to make chocolate in PA and imports it instead from its non-US plants with sales growing more than twice as fast as the US plant, you will understand the damage sugar tarriffs & quotas have done to the US economy, especially the already ocurring loss of jobs. (Hersey has closed some US plants already.)

On page 13: “As part of our global growth strategy, we are increasing our investments outside of the United States, particularly in Mexico, Brazil, India and China. …”

On page 23: “Net sales in the U.S. increased approximately 5.9% compared with 2010, with essentially equal contribution from net price realization and sales volume gains. Net sales for our businesses outside of the U.S. increased approximately 14.5% in 2011 compared with 2010, reflecting sales volume increases and net price realization, particularly for our focus markets in Mexico, Brazil, China and India…” Surely much of this greater than twice the Ex-US growth rate is due to fact all these markets have middle classes rapidly expanding and growing wealther, in contrast to the converse in the USA.

Interestingly, on page 15 they list their properties: four manufacturing facilities in the US, and the one in Monterrey, Mexico, but not the one in São Roquo, Brazil. The Mexican plant replaced the plant of their first move out of the US (a plant in Ontario Canada) and one, now closed, in Oakdale, California:

“{Hersey}opened on June 15, 1963 in Smiths Falls, Ontario, Canada and the third opened on May 22, 1965 in Oakdale, California.[13][dead link] In February and April 2007 Hershey's announced that their Smiths Falls[14][15] and Oakdale[16][17] plants would close in 2008, being replaced in part by a new facility in Monterrey, Mexico. The Oakdale factory closed on February 1, 2008.[18] Hershey chocolate factory in São Roque, Brazil was opened in August 2002. …”
From: http://en.wikipedia.org/wiki/The_Hershey_Company

SUMMARY: (and why important to understand that sugar quotas and tariffs damage the US ): In general it is ALWAYS to the long term advantage to the societies of both trading partners, IF the trades are based on real / natural economic and not some government protection or subsidy program. Likewise the converse is true: Government protection of domestic producers with higher cost of production is ALWAYS is a net long term loss / cost to the society “protected.” This is why the WTO has strong rules limiting the use of trade barriers to short term periods. Nearly every economist, with no vested interest in some tariff and/or quota protected industy agrees with the WTO position.

Sugar quotas and protective tariff are no exception to this general rule: I.e. the net effect is to hurt Americans and the US economy. Free trade is ALWAYS best, but in must be free of government distortions and based on natural differential production cost advantages. The US should not be producing sugar any more than it should be producing coffee as both have lower natural production costs elsewhere.

If the tariff walls and quotas were removed, the land now growing sugar beats would be producing soy beans (or other cost effective crop). With soy, the US is cost competive without subsidies - Soy is a major export of the US, with long term rising prices. It helps the balance of payments but the tariff & quotas hurt the balance of payments as US imports, more cheaper to make, foreign chocolate.

 

No Billy, Free Trade is not always better to the societies of both trading partners UNLESS the world was a level playing field.

It isn't.

You implement the SAME level of Minimum wage and other Govt programs in the producing countries and then come talk about "Free Trade".

Without that the US competes at a significant disadvantage in any labor intensive commodity, particularly agricultural ones.

If United States tariffs on imported sugar were reduced, U.S. sugar producers would receive far lower prices and thus lower profits and indeed it would likely mean the end of the US Sugar Beet production.

And so while U.S. sugar consumers would spend a bit less for the same amount of sugar because of those same lower prices, the losses would be concentrated amoung a relatively small number of growers providing the input to the US Sugar industry, and so unable to compete with Sugar Beets against Tropical Sugar Cane, the entire industry would likely shrink and eventually be lost and thus we would become totally dependent on Foreign sources for all our Sugar and considering how much of our daily caloric intake comes from sugar that would be a BAD idea.

 

Not now is the "playing field" level, I agree, but with the unsustainable US debt growth there will be a collapse of the dollar value and much lower salaries in the US, for those who even have jobs.

I said free trade (no governement distortions) is a "long term" benefit. The US needs to (and to large extent is) replacing man power with machines and automation. In many areas, the labor cost differences have already been off set by higher use of machines.

For example grains from the US are sold in Africa at lower cost than local man-power intensive production. If I could see figures, I would find an early one I posted showing a "V" shapped wedge of 21+ large, GPS guided, air condition cab, machines harvesting crop of Soy Beans. Thus US´s main agricultural crops for export are NOT labor intensive - they are capital intensive. (There probably were more than 21 harvesting machines but the photo did not show all - only a tiny part of one at ede of the photo, and who knows how many with no part fitting in the photo.)

 

That is just your opinion Billy.

Maybe on a global scale but that doesn't mean it is a benefit to the US now.

Many believe there IS value in having a US sugar industry and free trade would likely reduce ours significantly.

Top Sugar producers:

1. Brazil ... 30 million tons (20% of global sugar production)
2. European Union ... 22 million (14.7%)
3. India ... 20 million (13.3%)
4. China ... 10 million (6.6%)
5. United States ... 7 million (4.6%)

The economic cost to the US to lose the production of 7 million tons of sugar and have to import it would be quite negative.

 

And that is just your opinion, possible only because it ignores all the jobs in the candy industry and taxes they paid before they left the high-cost production area of the US to produce their candy in Brazil & Mexico mainly.

If any reader lives in the SW USA, look and see where your Hersey bar was made - Mexico I bet (assuming that its lower production cost is not offset by some tariff on it, etc.).

 

And yet you haven't substantiated that claim Billy.

Like I pointed out, the US candy manufacturing industry includes about 1,600 companies with combined annual revenue of about $20 billion, so clearly they haven't left the US.

And then of course there is the over 13,000 farmers that plant, grow, harvest and sell to local refineries the 7 million tons of sugar produced in the US each year (we are indeed, the 5th largest producer of Sugar, which of course puts us behind the EU, who have similar protections (Sugar factories are required to pay farmers a minimum price of EU 26.29 per tonne for sugar beet for the production of quota sugar (13.3 million tons))

Again, you are just guessing Billy.
There is no evidence to support your assertion that the cost differential for sugar, of less than 1/2 c per candy bar, makes up for the cost to transport the candy longer distances. So sure, while candy for the SW might be made in Mexico, but that's more likely due to the fact that it's a lot closer than Hershey Pennsylvania.

And I (who live in the Southeast) just checked my stock of candy and all of it was made in the US.

 

Yes I have, but here it is AGAIN in greater detail, giving number of jobs lost and part of the dollars of foreign plant construction, etc.:

"... From jellied hearts to chocolates, Mexico's candy exports to the United States have more than doubled {in the seven years} since 2002 as cheaper labor and sugar draw U.S. candymakers south of the border.

The latest arrival is Hershey, which is building a 1,500-employee factory in the northern Mexican city of Monterrey to replace plants it closed in the USA and Canada. It's following the lead of companies ranging from Brach's Confections, famous for its caramels, to Ferrara Pan Candy, the maker of Red Hots and Jawbusters.

Confectioners say they're trying to survive in a difficult business climate, but U.S. unions bemoan the loss of candymaking jobs. "All these companies want to make it cheap overseas somewhere, then bring it back and sell it to our people who don't have any jobs to buy it," said Dennis Bomberger, business manager of Chocolate Workers Local 464 in Hershey, Pa.

The move to Mexico began several years ago with makers of hard candy, said Bernard Pacyniak, editor of Candy Industry magazine. Many of them cited high U.S. sugar prices, which have been propped up for decades by government subsidies. "It's multinationals just trying to contain their costs," Pacyniak said.

Companies with new Mexican operations include:

•Brach's Confections, which closed its Chicago factory in 2003 and moved to a new factory in Linares, Mexico.

•Bobs Candies of Albany, Ga., a leader in the candy cane business, which moved the last of its production to Reynosa in 2005.

•Sunrise Confections, which opened a plant in Ciudad Ju?rez in 2001 to make candies for U.S. grocery store brands. For Valentine's Day, it churns out jellied hearts, cinnamon hearts and pink-and-red jelly beans. It has 1,000 Mexican employees and is one of the biggest candymakers on the continent, said Beth Podol, the company's marketing manager.

In all, the USA has lost more than 10,000 candymaking jobs since 1997 {Probably more like 20,000 jobs now as the Brazilian plant did not exist in 2009. I.e. this is data from ~five years ago on an accelerating trend. See data in my prior post from Hershey´s annual 2011 SEC report showing foreign production is increasing at more than twice Hersey US increase of production rate.} because of lower sugar prices and cheaper wages abroad, a 2006 U.S. Department of Commerce report said.

Hershey, which once marketed itself as "The Great American Chocolate Bar," has made the new plant in Monterrey the centerpiece of a $575 million cost-cutting plan. Since 2007, the company has closed or shrunk factories in Oakdale, Calif.; Reading, Pa.; San Francisco; and other sites.

Moving many of those product lines to Monterrey could save the company about $190 million a year by 2010, Hershey says. It has a plant in Guadalajara that makes candy for the Mexican market. Company spokesman Kirk Saville would not say what the company plans to make in Monterrey and added that the plant would account for only 10% of the chocolate sold in the USA. ..."

From: US Today article in 2009 about the closing of US and Canadain plants (written before the move to Brazil was known, so story now is much worse.) at: http://www.usatoday.com/money/industries/food/2009-02-12-mexicosweets_N.htm

 

You missed the point about: because of lower sugar prices and cheaper wages abroad, ... Or that "Company spokesman Kirk Saville would not say what the company plans to make in Monterrey and added that the plant would account for only 10% of the chocolate sold in the USA."

So it has a LOT more than just slightly lower Sugar prices, but Billy you are ignoring all the OTHER reasons companies move manufacturing jobs out of the US. ...

Billy T note: Sorry, by accident I clicked on Edit, not "quote" and messed up good part of your post while writing my reply. Above is all I could intitially restore. By using computer´s back space I found original as follows but must leave house now so may not be only or exactly what you wrote: (Feel free to edit and get it back correct )

And yet you haven't substantiated that claim Billy.

Like I pointed out, the US candy manufacturing industry includes about 1,600 companies with combined annual revenue of about $20 billion, so clearly they haven't left the US.

And then of course there is the over 13,000 farmers that plant, grow, harvest and sell to local refineries the 7 million tons of sugar produced in the US each year (we are indeed, the 5th largest producer of Sugar, which of course puts us behind the EU, who have similar protections (Sugar factories are required to pay farmers a minimum price of EU 26.29 per tonne for sugar beet for the production of quota sugar (13.3 million tons))


Again, you are just guessing Billy.
There is no evidence to support your assertion that the cost differential for sugar, of less than 1/2 c per candy bar, makes up for the cost to transport the candy longer distances. So sure, while candy for the SW might be made in Mexico, but that's more likely due to the fact that it's a lot closer than Hershey Pennsylvania.

And I (who live in the Southeast) just checked my stock of candy and all of it was made in the US.