Tight sugar supplies are edging up candy companies' costs and cutting into confectionary production, months before the Halloween season, reports The Wall Street Journal.
A U.S. agriculture policy requiring 85 percent of sugar to come from domestic producers is to blame, according to candy producers. The policy means that supplies tighten as demand rises because producers have no other sourcing options. According to USDA data, the U.S. sugar supply is expected to decline by 2.3 percent in the next crop year.
On the other hand, sugar farmers and processors laud the policy for protecting farmers’ livelihoods while allowing for sufficient supply.
In an April earnings call, Hershey and Mondelez executives shared that high sugar prices have contributed to rising costs. A smaller maker, Spangler Candy said that it had to turn down Halloween candy orders because of sugar prices, according to the report.
“It is so much more expensive to manufacture candy in the United States, and sometimes we lose business because of it,” said Kirk Vashaw, president of Spangler Candy. Full Story (Subscription Required)
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