Crystal Sugar Company CEO, David Berg, isn’t having huge success in the sugar business lately. Though sugar prices remain high, his company and others face ‘serious roadblocks’ due to the anti-GMO movement (aka demand for Non-GM) and Texas Sen. Ted Cruz, who wants to dispose of government assistance to sugar.
American Crystal Sugar Company has donated over $1.3 million to 221 members of Congress this election cycle, following $1.4 million spent on lobbying in 2013 in order to keep government money coming its way, and the money is BIG.
The U.S. Department of Agriculture arranges loans to sugar farmers and allows them to repay those loans with raw sugar if prices fall below 20.9 cents per pound. This subsidy program drives up prices for consumers and thus doubly subsidizes the industry. The USDA then sells this sugar at a steeply discounted price to ethanol producers.
Last year, the USDA spent $53.3 million on the program. Including the loans that could not be repaid, the government spent $171.5 million just to keep the sugar business ‘sweet’ on cash.
Some studies argue that if sugar prices were not subsidized, they would fall to almost a third of their current cost, saving Americans between $2.9 billion and $3.5 billion annually. [1]
Considering that obesity is an American epidemic, why are we subsidizing sugar at all?
Berg recently addressed Senator Cruz who is running for President on the republican ticket, telling him:
“We will defend the sugar program for a long, long time. Hopefully longer than your presidential race will last.”
Much of the industry that Berg is trying to protect also grows genetically modified (GM) sugar cane. The industry has been under biotech’s watchful eye for years now, knowing how profitable it can be.
In fact, the Cooperative Research Center (CRC) for Sugar Industry Innovation through Biotechnology was created in July 2003, seeking to make sugarcane production more profitable through cane improvement and industry diversification through the application of biotechnology, but consumers aren’t very keen on the idea of eating GM sugar. Multiple strains of GM sugarcane have been grown commercially since at least 2013. [2] [3]
Berg is miffed that the anti-GM movement, along with Senator Cruz, are messing with his money train. In his recent speech, he said that Crystal Sugar could weather the decision by Hershey Co. to buy only non-GMO cane sugar, but he is worried that more companies will follow its lead. [4]
American Crystal Sugar Co. CEO David Berg speaks at a news conference during the cooperative’s annual meeting in Fargo, N.D. on Thursday, Dec. 3, 2015. Berg says sugar prices are better than a year ago but the company is facing roadblocks from the anti-genetically modified foods movement and Texas Sen. Ted Cruz, who wants to do away with government assistance to sugar. (AP Photo/Dave Kolpack)
“There are other companies that are making inquiries,” Berg said. “This is not something we are going to run out and go into a panic about. But it is something that we’ve certainly got our eyes on.”
Berg should be worried. Consumers have made it clear that they don’t want GM foods, and in the very least they want them labeled. Poll after poll says that 90% of Americans prefer to decide if they eat GM sugar, or any other genetically altered product.
If companies don’t make a change, they can look forward to profit losses as Americans increasingly demand more GM-free food.
Sources:
[1] Economics21
[2] AgBioForum
[3] GMO Inside
[4] STL Today