August 04, 2005
Thursday

Sugar may be a sweet staple in cupboards across America, but the industry behind it is showing a bitter edge these days.

The U.S. sugar industry is lashing out at critics and competitors alike, while at the same time trying to boost its image among consumers with a warm and fuzzy ad campaign in select urban markets this summer.

"We decided we really needed to get our message out. ... Sugar is not the enemy that everyone has made it out to be," said Melanie Miller, spokeswoman for the Sugar Association, a Washington trade group of American sugar beet and cane growers.

The industry may not want to be seen as an enemy, but in recent months it has taken on everyone from the president of the United States in a battle over an international trade agreement, to the makers of the artificial sweetener Splenda, to prominent health and consumer groups urging Americans to eat less sugar.

"This is a tremendously powerful industry," said Gary Ruskin, co-founder of Commercial Alert, a nonprofit organization in Portland, Ore., working to protect children and communities from commercialism. "They care only about the health of their bottom line, not the health of Americans."

That bottom line was a huge and divisive component in the recent showdown in Congress over CAFTA, the Central American Free Trade Agreement. The sugar industry fought long and hard to kill CAFTA, arguing that the treaty's allowance of more foreign sugar into the United States would hurt domestic farmers.

The United States consumes about 10 million tons of sugar a year; 1.5 million of those tons now come from other countries.

In the end, the sugar lobby lost. The pact was signed into law this week by President Bush, who twisted arms in Congress to get the treaty passed.

Day to day, most people don't give much thought to the economic ins and outs of sugar when they sprinkle it on their cereal or stir it into iced tea. With an average retail price of about 42 cents a pound, it hardly registers as a budget buster in most homes.

But according to some researchers and economists, Americans pay heavily for the sugar they eat, whether it is from the sugar bowl on the table or generously endowed candies, pastries and other processed foods.

That's because the domestic sugar industry has been able to keep its prices high thanks to government loan programs and tariffs on foreign imports, said Doug Bandow, a senior fellow with the Cato Institute, a free-market think tank in Washington.

According to a briefing report on sugars and sweeteners by the U.S. Department of Agriculture, U.S. sugar prices have run well above world prices since 1982. For example, the world price per pound for raw sugar was 8.61 cents in 2004, compared with 20.46 cents for U.S. raw sugar.

Those figures give an inaccurate picture because of government subsidies in other countries and quirks in sugar markets, said Phillip Hayes, spokesman for the American Sugar Alliance, a Washington trade group of growers and processors.

The retail price of sugar in the United States has been flat for decades, he said.

Bandow said the federal figures don't lie.

"The industry wouldn't be fighting so hard for the protections if they weren't getting a lot from them. They are benefiting greatly at the expense of consumers," Bandow said, noting the government's support programs and the resulting higher sugar prices cost consumers and taxpayers "hundreds of millions a year."

The sugar industry has been fighting to preserve its profit margins for years. In the early 1980s, cheaper-priced corn sweeteners overtook about half of the refined-sugar industry's traditional U.S. market, most notably the massive soda-pop business.

In addition, sugar has had to compete increasingly with artificial sweeteners. The industry is not conceding territory politely.

Last winter, the Sugar Association sued McNeil Nutritionals, a subsidiary of Johnson & Johnson that makes Splenda, a popular artificial sweetener. The lawsuit, filed in federal district court in Los Angeles, accuses McNeil of deceptive advertising for its "Made from sugar, so it tastes like sugar" promotions.

The product does begin with sugar, but is chemically altered in significant ways, said Daniel Callister, a Los Angeles attorney for the Sugar Association. "We think it's misleading to say 'made from sugar' when it becomes something else," he said.

McNeil, in turn, has filed a federal suit in Delaware claiming the Sugar Association smeared the name of its product by setting up a critical Web site, thetruthaboutsplenda.com.

Sugar's toughest battle of all may also be the most personal for consumers: its effect on our collective good health.

For years, consumer and public-health experts have pointed to excessive sugar consumption - both refined sugar and corn sweeteners - as a major culprit in the growth of obesity and chronic diseases such as diabetes.

"It's not a poison. But American consumers have gone overboard," said Michael Jacobson, executive director of the Center for Science in the Public Interest.

Nationally, the hold-the-sugar message has begun to hit its mark.

Ninety-four percent of households in America still keep refined white sugar on the shelf, said Harry Balzer, vice president of the NPD Group, a New York consumer market research firm. But the percentage who use it on a regular basis has dropped over the past decade from 60 percent to 48 percent.

The industry attributes its most recent consumption losses to geared-up campaigns against obesity, plus the popularity of Atkins and other low-carb diets.

In recent years, sugar producers have aggressively fought attempts by public-health groups to set daily upper limits for consumption of added sugars. In a legendary battle two years ago, the industry tried without success to stop the World Health Organization from recommending that people consume no more than 10 percent of their daily calories from added sugars.

On a typical 2,000-calorie-a-day diet, that means no more than 200 calories could come from added sugars. According to USDA figures, Americans consume on average more than twice that much.

Sugar farmers warned that such advice would put many farmers out of business, recalled Derek Yach, a Yale University professor of global health who headed the WHO's unit that dealt with diet and exercise guidelines for reducing chronic diseases and obesity across the globe.

"They fought any upper limit with spurious arguments," Yach said.

The Sugar Association, which believes scientific studies have not established a link between sugar consumption and increasing obesity, launched a $3 million ad campaign in May to boost its image. The campaign touts sugar as a natural sweetener with just 15 calories per teaspoon.

"Our message is that sugar is all-natural," Miller said.

The sentimental television and radio ads - featuring grandmothers, cakes and apple pies - are running in Portland and Milwaukee and will expand to five more markets in time for the fall baking season.

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