Another Thought About The Sugar Industry

Lynne Kiesling

If Splenda is made from sugar, won’t the sugar industry continue to benefit from sales of it because they are providing the crucial input? Clearly they are unlikely to get paid as much per pound for sugar as an input as at retail, so in order for their profits to stay up Splenda’s growth rate would have to be quite large.

So I have a couple of industrial organization questions. Where does Splenda get its sucrose? Are they vertically integrated, or do they contract with beet and/or cane farmers to buy bulk sugar? Do they buy it domestically (I suspect they do), or internationally?

My policy question is this: will the combination of technological change (making Splenda possible) and the high popularity of Splenda contribute to the demise of this insupportable protectionism?

3 thoughts on “Another Thought About The Sugar Industry

  1. Splenda manufacturing can use sucrose as feedstock but can also use other materials. Sucrose is not required. Manufacturing seems to be moving offshore to plants in the developing world though it is currently still a domestic industry.

  2. Sucralose (the active ingredient in Splenda) has in fact been around for decades–according to the Merck Index, it was first prepared in the mid-’70s, and the US patents covering the preparation and its use as a sweetener expired a few years ago. This wasn’t a case of waiting for it to go off-patent either, I would guess, as the only manufacturer I’m aware of today is the original patentee.

  3. Lynne, I don’t see any reason to think that the answer to your policy question is not a big fat no.

    I hope you won’t think I’m just speaking from reflex when I lament libertarians’ tendency to treat subjects like this with a lot of ineffectual teeth-gnashing followed by wishing and hoping that some technological change will fix the problem for them. The explosion in use of corn sweetener, in soft drinks and all sorts of other products, was a technological change too. So far from undermining support for the sugar program, it increased that support, because import quotas no longer threatened really damaging domestic sugar shortages.

    Nothing but hard, difficult work will suffice to change bad policy to good. The sugar program does cost American consumers money (though not that much relative to the average consumer’s budget); it does drive jobs overseas (though most of that damage has already been done); and it seriously complicates American foreign policy, particularly with respect to Latin America and the American position in global trade liberalization negotiations. Also sugar cultivation is lousy for the environment, especially in Florida.

    Linkages between these arguments need to be made, and advocates found and organized on the Hill and the administration. I don’t mean to sound like the preacher lecturing the choir on the evils of skipping Sunday services, but I’ve been reading ineffectual rantings on this subject from groups like Cato and Reason for over 20 years now. They’re written when Bandow or someone needs to publish something and forgotten about almost instantly as their authors pass on to less complicated subjects. Then when a farm bill does come up, and with it an opportunity to do something about this program, they’re invisible. But they do complain wittily afterwards.

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