In a time when America’s manufacturing base was crumbling, food manufacturers that produce products made with sugar thrived, according to figures released in a February Department of Commerce study.

Domestic production of sweet products—including candy, cakes, and ice cream—grew by a staggering 10.5 percent between 1997 and 2002, the study said.  

Jack Roney, an economist with the American Sugar Alliance, thinks this is remarkable considering the economic downturn and outsourcing America experienced during the period. 

He also points out that these numbers would have been even larger if not for low-sugar diet trends like Atkins and South Beach.

“It’s always good to see your customers do well,” Roney said.  “We hope their success continues; after all, the more they sell, the more sugar our farmers sell.”

Figures from the government study also show that manufacturers of sugary products were virtually immune to America’s skyrocketing unemployment rate from 1997-2002.
 
According to the study, job loss in the sector was a mere one percent. By contrast, unemployment in the United States grew by 18 percent over the same period.

Unfortunately for sugar farmers, much of this good fortune came at their expense. 

Food manufacturers paid farmers less and less for sugar over the six-year period examined in the study.  And these low prices translated into lost jobs, says Roney.

“We’ve closed 33 sugar factories in the last 10 years because prices dropped so low,” he said.  “Unfortunately, these closings cost thousands of sugar workers their jobs.”

Roney also pointed out that consumers saw none of the benefits of lower sugar prices because food manufacturers pocketed the savings.

“Even though sugar farmers made less, grocery shoppers actually paid more as the cost of cereal, candy, cookies, ice cream, and bakery goods steadily climbed,” Roney added. “In other words, we got poorer, Soccer Moms forked over more of the family food budget, and large food manufacturers boosted profits on both our backs.”

Despite the tale of two industries, there are still sugar-policy opponents who claim that the cost of U.S. sugar has forced some companies to flee the country.

But the few big candy companies that have relocated aren’t pointing the finger squarely at sugar.

Julie Daniels, a spokesperson for Brach’s Confections told the Associated Press that the closure of its Chicago factory "was based on lots of factors and could not be pinned specifically on sugar pricing."

Labor was likely the biggest factor, according to a study by Peter Buzzanell, a former USDA sweetener analyst.

Buzzanell found that Brach’s left an obsolete factory, where it paid Chicago workers $14 an hour, and relocated to a brand-new Mexican factory—where it pays workers 56 cents an hour.

Kraft spokesperson Cathy Pernu echoed this same sentiment when discussing the closure of its Life Savers plant in Michigan during a 2002 interview.  According to Pernu, the biggest factor in Kraft’s relocation was the fact that their U.S. factory was underutilized, not U.S. sugar prices.

On February 8, the American Sugar Alliance sent Congress a report, titled “Candy Companies Flee U.S. Workers; Not U.S. Sugar Prices,” which pinpointed the main reasons a handful of candy companies have left.

Wages and worker benefits are the overriding factors for relocation, the ASA report said, with other factors—including lower taxes, transportation issues, energy costs and land and construction expenses—coming into play.