Food Politics

I keep hearing rumors that food industry opposition is what is holding up release of the FTC’s position paper on nutrition standards for marketing foods to kids.

I titled my previous post on this report “Standards for marketing foods to kids: tentative, proposed, weak,” because I thought they left far too much wiggle room for companies to market products that I would not exactly call health foods.

Now, Melanie Warner points out that even so, the proposed standards will exclude a great many highly profitable food products.  Hence: food company opposition.

Susan Linn of the Campaign for a Commercial-Free Childhood quotes an executive of the food industry’s Children’s Food and Beverage Advertising Initiative: “There are very few products, period, that meet these standards, whether they’re primarily consumed by adults or children.”

The food industry has consistently opposed giving the FTC more authority over marketing of foods and supplements.  Here is another reason why this agency needs it.

Update, July 24: The missing FTC report is front-page news!  William Neuman is on the front page of the New York Times with a detailed account of the Federal Trade Commission’s lack of action on food company advertising practices.  The FTC standards were expected last week but nobody seems to know when, if ever, they will be released.

Update, July 30: Here is Colbert’s take on the delaying of FTC standards.

Thanks to Marlene Schwartz of the Rudd Center for Food Policy and Obesity at Yale for alerting me to this Associated Press report about the new dairy industry campaign to rescue chocolate milk from the food police.  This, you will not be surprised to hear, is the latest activity funded by the milk checkoff program, a USDA-administered program that requires certain commodity producers to contribute funds to a kitty to be used for generic marketing.  One such program is MilkPep, the incredibly well funded marketing group that together with the Dairy Council invented the “Got Milk” mustache campaign.

MilkPep is now the proud defender of chocolate milk against efforts to get it out of schools.  Why would anyone be so mean as to want to do that?  Maybe because chocolate milk has more sugar and calories than plain milk?  No matter.  MilkPet is stepping up to the plate.  Its $500,000 to $1,000,000 “raise your hand for chocolate milk” campaign takes on those pesky nutrition advocates who think that kids ought to be eating something other than sweets in schools.

The rationale for the campaign?  If you get rid of chocolate milk, kids won’t drink milk.  You will deprive kids of the nutrients in milk and contribute to the “milk deficit.”   After all, this rationale goes, chocolate milk is better than soda (Oops.  Didn’t we just hear something like this relative to the Smart Choices fiasco?).

OK.  Let’s look at what this is really about:

• Schools represent sales of 460 million gallons of milk – more than 7% of total milk sales
• More than half (54%) of flavored milk is sold in schools
• Chocolate milk is a key growth area for milk processors

MilkPep has produced a slide show to help companies take action (I apologize for not linking to it but I have not yet succeeded in uploading a large file, despite many attempts).  The slides advise allies to go on a “chocolate milk offensive”:

• Do public relations
• Get bloggers on board
• Engage moms through social media
• Take advantage of SuperBowl ads – the campaign intends to fund one
• Reach out to media

Doesn’t this sound like something ripe for satire?  Colbert!  We need you!

Additions:  Do not miss the YouTube version.  And here’s theofficial MilkPep press release.  Note the testimonials to the benefits of chocolate milk.  It’s a health food!

My Sunday (September 20) column in the San Francisco Chronicle deals with the sugar “crisis” I discussed here a few weeks ago:

Q: I saw you on “The Colbert Report” (Aug. 19) talking about sugar policy. Explain, please. I don’t understand why sugar policy is a topic for Comedy Central.

A: Neither did I until I saw Stephen Colbert douse himself with 5 pounds of sugar over the impending “crisis.” We have a sugar crisis? According to processed food manufacturers, we are about to run out of sugar. Horrors!

Earlier in August, Kraft and other food processors asked the U.S. Department of Agriculture to raise the quota on sugar imports. Sugar availability, they complained, is the lowest in years and it’s the USDA’s fault.

The USDA firmly controls amounts of sugar (sucrose) produced by American cane and beet growers through quotas. It even more firmly controls sugar imported from other sugar-growing countries through quotas and tariffs. And as corn is increasingly diverted to biofuels, less high-fructose corn syrup (HFCS) is around to make up the shortfall.

Should we worry?

The shortage is no crisis. At worst, it is temporary and will end as soon as the 2009 harvest is in. But processed food makers are right about one thing: Sugar is the most absurdly protected agricultural commodity in America.

For decades, no matter what it cost on the world market, quotas and tariffs ensured that Americans paid two or three times as much for sugar. High sugar prices cost American consumers about $3 billion a year. But because this works out “only” to about $10 per year per capita, nobody much cared.

If you think of $10 as trivial, you won’t give sugar protectionism another thought. But if you look at this system as an unnecessary transfer of $3 billion a year from 350 million Americans to a few thousand sugar growers and processors, you can understand why sugar policy is ripe for satire.

Here’s how the system works:

Quotas allow U.S. producers to grow only specified amounts of sugar cane and sugar beets each year, for which the USDA guarantees a higher-than-market price. Beets get 55 percent of the quota; cane gets 45 percent. The quotas are fixed. If you want to grow sugar beets in your backyard and sell the sugar to USDA at the favorable support price, too bad for you. You only get a quota if you already have a quota.

As for tariffs, the 2008 Farm Bill requires 85 percent of total sugar in the United States to be produced domestically, and allows only 15 percent to be imported. That 15 percent is distributed through quotas awarded to about 20 countries.

Above and beyond the quotas, imported sugar is subject to high tariffs. Mexico is an exception. Under NAFTA, Mexico gets to sell us as much sugar as it wants at the favored price. However, few countries in Africa hold quotas. What if you are an African cane-growing country and want the high quota price for your sugar? Not a chance.

Imports are never supposed to top 15 percent, so the USDA can’t increase the percentage. But we participate in the World Trade Organization, which obligates us to take world market sugar. Oops. These policies don’t match. Processed food makers must think the contradictions will allow the USDA to let in more sugar. Maybe, but the legalities are not yet decided.

Mind you, sugar producers and processors love this system. They argue that it keeps jobs in rural America and eliminates dependence on foreign sugar imports. To make sure nobody scrutinizes the system too carefully, they formed cooperatives to avoid antitrust laws.

Sugar producers are among the most generous and equal-opportunity contributors to congressional election campaigns, giving to both Democrats and Republicans. For decades, administrations of both parties have tried to end sugar supports. No such luck.

A shift’s brewing

Policies may change, because the gap between the prices for domestic and world market sugar – and for high fructose corn syrup – has narrowed recently. Sugar is now at war with HFCS. As HFCS is increasingly known as a key junk food ingredient, manufacturers are rushing to replace it with sucrose, which they can tout as “natural and unprocessed.”

Other sugar issues are also ripe for comedy. Most sugar beets are now genetically modified, leading many companies to avoid using beet sugar. In the South, sugar cane production pollutes the Everglades, which is costing billions of dollars to clean up. Investigative reporters are riveted by the feudalistic labor practices of sugar plantations.

And then there’s Cuba. Until the Castro revolution, that’s where we got most of our imported sugar. When relations improve, will Cuba get a sugar quota?

If sugar is responsible for any true crisis, it is because of its role as an ingredient in processed foods. Cheap sugar reduces the cost of candy and soft drinks. Cheap junk foods are highly profitable. Otherwise, our sugar policies make no sense in today’s global marketplace.

But we would be healthier eating less sugar, anyway. So here’s my solution to the non-crisis: Eat less sugar!

Colbert Report, August 19: I was interviewed on the Colbert Report about sugar policy, of all things.  U.S. sugar policy is so absurd that I did not think it could be satirized, but Colbert managed just fine.  Here’s what I would have said if I hadn’t been completely disconcerted by his dousing himself with five pounds of sugar:

The sugar “crisis”: On August 5, several groups representing makers of processed foods wrote a letter asking the USDA to raise the quota on imported sugar because stocks are lower than they have been in years.  Why?  Because domestic sugar production is thoroughly governed by quotas, imported sugar is thoroughly controlled by quotas and tariffs, and high fructose corn syrup (HFCS) is increasingly diverted to ethanol.  Got that?

Reminder about definitions: “Sugar” usually refers just to sucrose made from sugar cane and sugar beets; it is glucose and fructose stuck together.  The other major sweetener is high fructose corn syrup (HFCS).  It is also made of glucose and fructose, but separated.   Sucrose and HFCS work the same way in the body and are hardly distinguishable physiologically.   For the purposes of this discussion, I use sugar to refer to the sweetener refined from sugar beets and sugar cane, and HFCS for the sweetener made from corn.

Sugar protection policies: Even though it amounts to only 1% of agricultural production, U.S. sugar is the single most heavily protected agricultural commodity.  No matter what the price on the world market, U.S. sugar producers and processors get paid a high price.  Historically, this price has been two to three times higher than world market prices.   Although this has for decades cost American consumers $2 billion to $3 billion a year in higher sugar prices, nobody much noticed because it “only” amounted to about $10 per year per person over and above what you would pay for sugar anyway.  Today, the gap between domestic and world market prices has gotten much smaller, mainly because there isn’t as much HFCS around (more on this later).

Quotas and tariffs: These are amazing, really.  U.S. producers are allowed to grow a certain amount of cane and beets each year for which they are guaranteed a price set by USDA.    Beets get 55% of the total quota allotment and cane gets 45%. This works like a closed shop.  If you want to start growing beets or cane for domestic sugar production, too bad.  Catch 22: You only get to have a quota if you already have a quota.  As for tariffs:  The 2008 Farm Bill says that 85% of total sugar in the U.S. must be produced domestically, and only 15% can be imported.  That 15% comes in through quotas distributed among about 20 countries.   Any other sugar they want to send us is subject to high tariffs, except from Mexico.  Under NAFTA, Mexico can export as much sugar to us as it wants to at the favored price.  But imported sugar is never supposed to exceed 15%.

International issues: Our agreement with the World Trade Organization (Uruguay Round) says we have to take a certain amount of world market sugar.  But the 2008 Farm Bill restricts imports.  Oops.  The contradictions in these policies still have to be resolved.  The processed food people think the USDA can raise the percentage.  Can it?  Hmmm.  We don’t know this yet.

Who benefits: A few thousand beet producers in about 15 states and a few hundred cane producers, and the sugar processors.  They get paid amounts that are higher than world market prices.   The countries that have sugar quotas also get higher prices for their sugar quotas.  Producers of sugar cane and beets love this system.   Florida cane producers defend it this way: “U.S. sugar policy ensures that jobs in rural America are not sent overseas, and that American consumers are not held captive by unreliable foreign suppliers of subsidized sugar.”  Like American-owned sugar plantations in the Dominican Republic, for example?

Who loses: According to the Government Accountability Office, everyone in America pays higher prices for sugar than we need to.  This amounts to a transfer of wealth from 350 million of us to a few thousand sugar producers and processors.   International sugar-producing countries that do not have quotas, those in Africa, for example, are also out of luck.

How this happened: The system started out in the Great Depression with the best of intentions.  Despite endless attempts to get rid of sugar supports and let prices fluctuate according to the world market, Congress continues this elaborate and expensive system to protect sugar producers and processors.  These groups have banded together in cooperatives so they avoid anti-trust laws.   Even the New York Times thinks we should get rid of sugar protections.  These groups, of course, are among the most generous and powerful contributors to congressional election campaigns.  Even more, they are equal opportunity contributors: they give to both Democrats and Republicans.  The Fanjul family in Florida is especially influential.  In the best known example, Mr. Fanjul was able to get President Bill Clinton to take his call on a federal holiday when Clinton was in the midst of a tryst with Monica Lewinsky (source: the Starr report).

What about HFCS: The public now puts HFCS in the same category as trans fats: poison (it’s not; it’s just sugars).   In response, makers of processed foods and beverages are starting to replace it with cane and beet sugar.   As explained in the current Advertising Age, sugar is now at war with HFCS.  HFCS used to be a lot cheaper than sugar, but its cost has gone up as more of it is used for ethanol.  Supply is down; costs are up.

Other issues: As if all this wasn’t complicated enough, sugar beets are largely genetically modified, leading more than 70 companies to say they won’t use that sugar.  Sugar cane production in the Southern states pollutes the Everglades, leading to billions of dollars in clean up costs.  And the labor practices of sugar cane plantations have long been the subject of much investigative reporting.  And what about relations with Cuba?  Until the Castro revolution, we got nearly all of our imported sugar from our Caribbean neighbor.  If relations with Cuba improve, will that country have a quota?

So what’s really going on? Food processors want cheap ingredients.   Cheap sugar makes for relatively cheap junk foods and high profits for manufacturers.  Current sugar policies make no sense in today’s global marketplace and we all ought to be eating less sugar anyway.  On average, we have about 70 pounds of sugar and another 70 of HFCS available per year for every man, woman, and child in the country along with a few pounds of other caloric sweeteners to boot.  That’s close to half a pound of sugary calories per day.   Less of all of them would be better, no? 

A final happy thought:  Maybe the processed food makers’ request – which is entirely self-interested – might lead to improvements in U.S. farm policy as well as relations with sugar-producing countries in the Caribbean and Africa.

Thanks to Stephen Laniel for alerting me to Colbert’s June 19 appearance with the Cookie–oops, fruit–Monster.  I ‘m not much of a TV watcher  but some things are worth watching!

Thanks to Alexandra Lewin for forwarding this link to the Colbert Report on McDonald’s report card gimmick. Interesting production values!

Eating Liberally’s “kat” took me to see Frank Rich’s interview with Stephen Colbert last night and what fun that was! But no such thing as a free event, apparently. Today, kat wants to know what I think about Doritos’ sponsorship of Colbert’s campaign. Take a look at her question and my response and weigh in on this, please. Even if it’s a joke…?