Episode 454: The Lollipop War : Planet Money Sugar costs more in the U.S. than in the rest of the world. If you're in the candy business — if, say, you make 10 million lollipops a day — that's a big deal.
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Episode 454: The Lollipop War

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Episode 454: The Lollipop War

Episode 454: The Lollipop War

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  • <iframe src="https://www.npr.org/player/embed/179295426/179332153" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

ZOE CHACE, HOST:

Everybody knows Dum Dums. They're those lollipops. You've seen them at your doctor's office or your bank - sugar, corn syrup, little wax wrapping, bunch of different flavors, sticks.

JESS JIANG, HOST:

But lots of people don't know where they come from.

DEAN SPANGLER: Do you like orange?

CHACE: Sure.

SPANGLER: It's a warm orange Dum Dum.

CHACE: We're looking at thousands of these little wrapped lollipops clattering out of this big steel pipe at the Dum Dum factory in northwest Ohio.

SPANGLER: In a minute and a half, he's going to mix savvy blueberry. Can you wait for that?

CHACE: Yes.

JIANG: Dean Spangler is the former CEO of the Spangler Company. And he's showing us around the kitchen at the candy factory. It's a little bit Willy Wonka.

CHACE: Imagine a kitchen made for giants with a couple of busy little chefs running around in aprons and hair nets.

SPANGLER: (Unintelligible) metal detectors.

CHACE: They're pouring these big steel pots of sticky sugar and corn syrup into this Kitchenaid that is as tall as a basketball hoop. And there's what looks like paint buckets just standing right next to it.

JIANG: The buckets are filled with flavors and colors. There's blueberry, cream soda, root beer, watermelon.

CHACE: Dum Dums is the signature product of this place, the Spangler Candy Company. The factory is several football fields big. They need a whole separate building just for the ingredients - well, one ingredient in particular.

SPANGLER: We use about a hundred thousand pounds of sugar a day.

CHACE: Where's the sugar?

SPANGLER: In the sugar shack.

CHACE: The room is basically big enough for four huge tanks of liquid sugar - 8 Olympic-sized swimming pools-worth.

SPANGLER: We have about enough sugar storage here for about four days. So we're receiving sugar, you know, constantly.

CHACE: All year long?

SPANGLER: All year long, all day long, 24 hours a day.

JIANG: Lots of places replace sugar with corn syrup. And there's corn syrup in these lollipops too. But Dean says to get the true flavor of your childhood, there is no substitute.

SPANGLER: Nothing delivers flavor like sugar. That's a reality. Could we make a Dum Dum with a pure corn sweetener? Probably. Would it make the same emotional connection with you? No, definitely wouldn't.

CHACE: It's the sugar that does that.

SPANGLER: The sugar is the - the sugar as the deliverer of the flavor.

CHACE: The Spangler Company - they actually make this other iconic piece of candy, something even more nostalgia inspiring than a lollipop.

JIANG: Red-and-white candy canes - they used to make them here at this factory in Ohio. But about 10 years ago, they moved the red-and-white candy cane operation to Mexico. It had gotten too expensive to make them here.

CHACE: The places that buy the candy canes to sell, the Targets and the Walmarts of the world, they don't care about the brand. They don't care where they come from. They want them cheap.

SPANGLER: Candy canes are treated like a commodity by the big-box stores completely - the red and whites. And when you go to the big-box retailers of the world, they leave for a quarter of a cent a cane - a half a cent a cane. I mean, they're going to the lowest price.

CHACE: So this story so far - a factory moving its operations from Ohio to Mexico where it could operate more cheaply - that's a typical story. You might think you know the reasons for that.

JIANG: But Kirk Vashaw, the current CEO of the Spangler Company, he's pretty sure you don't know the reasons. In fact, recently he was giving a talk at the Kiwanis club in town. It's kind of like a Rotary Club. And he explained he could expand his operations in a huge way right here in Ohio and not send any candy canes to Mexico at all.

KIRK VASHAW: And I said I just need one thing. People get excited. And then I asked them to guess what's the one thing that you need. And people guess, you know, all kinds of things - lower tax rates and how about workers comp reform and let's get rid of OSHA and let's repeal the Food Safety Modernization Act or pass a right-to-work law or let's get some government development money. And those are some of the things they guessed amongst other things. And I said no, it's not any of those. In fact, it's not all of those put together. If I paid zero taxes and got all those other things - which some of them don't even matter to us - it's not as important as the one thing that I need. And people are still guessing what it is. And I said let us buy sugar on the free market. And there's this silence. And then this kind of collective, huh? Why can't you do that? And then I say it's a story and I'm about to tell it to you.

(SOUNDBITE OF SONG, "SUGAR, SUGAR")

THE ARCHIES: (Singing) Sugar, ah honey honey, you are my candy girl and you got me wanting you. Honey, ah sugar sugar, you are my candy girl and you got me wanting you...

CHACE: Hello and welcome to PLANET MONEY. I'm Zoe Chace.

JIANG: And I'm Jess Jiang.

CHACE: Jess, you are here today because you are our amazing producer. And we have been on an adventure together working on this sugar piece.

JIANG: Yes, definitely - Kirk Vashaw's story - the story of a lot of American candy companies. It may not be exactly the story that Kirk would tell, but it takes us from his candy company in Bryan, Ohio, out to the sugar beet fields of Sabin, Minn., with stops in Washington, D.C.

(SOUNDBITE OF SONG, "SUGAR, SUGAR")

THE ARCHIES: (Singing) I just can't believe it's true. Ah sugar, ah honey, honey, you are my candy girl and you got me wanting you...

CHACE: Before we dive in, here is the most important thing you have to know to get into this story. There are two prices for sugar - the price you pay when you're in the United States and the price you pay almost everywhere else in the world.

JIANG: On average over the last decade, the price you pay in the United States, it's about 15 cents more than you pay outside the country - 15 cents more per pound of sugar.

CHACE: Fifteen cents extra per pound of sugar, if you're in the business of making candy, adds up to a lot of money.

SPANGLER: We're using a hundred thousand pounds a day. That's $15,000 a day. That's $75,000 a week. Multiply that by 52 weeks - that's $3 to $4 million.

JIANG: Three to four million dollars a year - that's what these guys call the sugar penalty. Now who would do this? Who would impose this utterly random tax on U.S. candy makers?

CHACE: The U.S. Congress. The Food Conservation and Energy Act of 2008, it is better known as the U.S. Farm Bill, and I'm just going to read this one part that (laughter) this whole story is really about. (Reading) Subtitle D - Sugar, section 156, Sugar Program, subsection B, sugar beets - it says that the U.S. government will guarantee this minimum price for sugar that is not to drop below, quote, "22.9 cents per pound," end quote.

JIANG: That's the guarantee. No matter how low the price goes in the rest of the world, in the United States, you will be paying at least 22.9 cents per pound.

CHACE: And it's all in the name of these guys.

BLANE BENEDICT: We're driving into the field where we're going to plant sugar beets in 2013. And the snow is only about three inches deep at the moment right here.

CHACE: It looks like a barren waste land.

BENEDICT: Yep.

JIANG: Blane Benedict - he's a sugar beet farmer here in Sabin, Minn., and he runs a farm with his two brothers.

BENEDICT: Farms in this part of the country were settled in the 1870s. And our family has been farming here since late 1870s.

CHACE: Blane and his brothers - fourth generation - and it is just vast out here. Farm land as far as you can see and (laughter) it's a long way out to the horizon. The clouds are low and gray. It's supposed to snow later this afternoon. But you can hear the birds even though the ground is still totally white.

(SOUNDBITE OF BIRDS CHIRPING)

JIANG: It's a hard conversation to come out onto someone's fourth-generation farm and say why do you get this special treatment. Why do you deserve a special line written in a bill that guarantees a minimum price for your product?

CHACE: We go around and around on it and the answer we land on is because all our foreign competitors are getting special protection too.

BENEDICT: There's government involvement in most developed countries at some level of - or another with a price control on sugar.

JIANG: The U.S. sugar guys say just look at Brazil. The Brazilian government gives a couple billion dollars in subsidies to their sugar industry. They say the Mexican government actually owns most of its factories that make sugar.

BENEDICT: I think our biggest fear is that we're all on a fair playing, you know, competitive field. You know, when - if you're competing against other government policies, you know - and I mean, that's what makes us nervous as a producer.

DANIEL SUMNER: It's a very common rationalization - you know, the other kids are doing it or that other guy's a bully or something.

CHACE: Daniel Sumner is an economist at UC Davis. In the early '90s, he worked at the USDA setting U.S. farm policy. He says the problem with this argument is there is already a solution to unfair trade practices - a solution that does not involve enshrining a price guarantee into the law.

SUMNER: On sugar, there's a very specific remedy here. We have something called countervailing duty law in the United States.

JIANG: It works like this - if you're an industry and you think another country is unfairly subsidizing something we buy from them, there's a solution. You complain to the World Trade Organization. The U.S. slaps a tariff or a tax on that import that's bigger than the subsidy amount. And that's the way to even the playing field.

CHACE: A lot of people told us there is this really big reason that sugar has a price guarantee embedded in the law. And this reason has nothing to do with Brazil or the WTO or actually economics at all.

VASHAW: You want me to just tell that piece of the story now?

CHACE: Back at the candy factory, Kirk Vashaw says here's the story that will really explain the U.S. sugar policy.

VASHAW: You know the Ken Starr report that - familiar with that. Well, the careful readers of that report will notice that there was somebody who called President Clinton while he was in the Oval Office with Monica Lewinsky. And the president took this person's phone call for 22 minutes, I think it was. And Monica wasn't very happy that the president was taking this person's phone call. Well, as part of the investigation, they - to corroborate her story, they went and looked at the White House records. And sure enough, it was one of the sugar tycoons, as I'll call them, had called President Clinton and had that conversation. That's the definition of having too much political power. When you can call the president of the United States when he's in the Oval Office with his mistress and you take his phone call, that's too much political power.

CHACE: We looked this up in the Starr report. And apparently, this call came in while Clinton was trying to end things with Monica, but the cigar incident was yet to come.

JIANG: But back to the sugar story. The sugar lobby - it is really powerful, super well-organized. Each year, it gives a lot of money to political campaigns and it spends a lot lobbying for or against bills. Last year, the sugar industry spent almost four times what the wheat, soybean and corn industry spent combined. And it spent almost double what the food and beverage industry spent as a whole.

CHACE: A big chunk of that money goes to people like this guy, U.S. Representative Collin Peterson. He is a democrat from Minnesota. And until recently, he was chair of the Agriculture Committee in the House.

COLLIN PETERSON: Well, I've been called a communist before. I'm OK with that.

CHACE: That's because Collin Peterson is a big advocate of the central planning of the sugar supply and the guaranteed minimum price. We asked him if the reason he's such a champion of the sugar program is that the sugar companies, like American Crystal, are the biggest contributors to his campaign.

PETERSON: If American Crystal gave me zero, I would take the same position.

CHACE: Really?

PETERSON: It wouldn't make any difference (laughter).

CHACE: Well, how do you know?

PETERSON: Well, because it's - this is 25 percent of the economy in my district. You think I'm not going to fight for this? You know, I mean, it has nothing to do with how much money they give me. They support me because I support them. But, you know, it's a - which comes first, the chicken or the egg, you know?

JIANG: Back in Sabin, Minn., incidentally Collin Peterson's hometown, his dad farmed potatoes out here.

CHACE: And he just sold the land to a sugar beet farmer.

JIANG: His constituents here in Minnesota, they agree with him.

CHACE: Crowbar is in the middle of nowhere. It's a dive in the shadow of a grain elevator. And everyone here can tell you stories about farmers driving around in shiny new trucks, farm aid checks from the government.

JIANG: But if you press them, they'll say nobody out here wants anything to change. I talked to Chris Lang (ph) and Judy Hansen (ph) over beers and they love the system the way it is. In fact, in October, during the harvest when sugar beet farmers start turning sugar beets into sugar...

JUDY HANSEN: There's a bad smell in the air, but it's the smell of money.

CHRIS LANG: It smells like money - exactly.

HANSEN: It smells like money.

LANG: Yeah, it smells like money so...

HANSEN: (Laughter) It does - it's a bad, bad smell.

LANG: ...I don't know. No, no, it - but it smells like success. It smells like people are getting shoes on kids' feet. It smells like we're building stuff. And it trickle - and everything trickles down from that.

PETERSON: If you eliminate the sugar program...

JIANG: Again, Congressman Collin Peterson.

PETERSON: ...What will happen is we will not grow sugar in the United States.

CHACE: And why is that such a bad thing?

PETERSON: Because it's a huge economic activity in many parts of this country that have created a lot of jobs and a lot of economic activity. You know, everybody wants the government to fix - you know, to create jobs. That - when we do these polls, the government's not doing enough to create jobs. And the one area that through this recession, the one area that's worked that's actually been successful and has actually maintained and increased jobs has been agriculture. And so the people that claim that they want us, the government, to improve the economy are going after sugar and dairy and crop insurance and every other aspect of the of the farm sector. They're trying to screw up the one thing that's actually working.

JIANG: Now the other side of this - the candy manufacturers - they make the same argument just in reverse. Peterson says jobs might be lost. The candy guys say jobs that might otherwise have been created weren't.

CHACE: That's what's so strange about this whole thing. We're not so different you and I. They're both these classic American industries - Minnesota farming, Ohio manufacturing.

JIANG: In Minnesota, there's four generations of farmers farming this land. But in Ohio, those guys are fourth generation too. The Spangler factory has been around since 1906 - always run by a Spangler. The fifth generation of Spanglers worked as an intern in the factory this year.

CHACE: And both guys make the same argument - that their industries are a multiplier. The candy makers say what about the guys who supply the wrapping paper for the Dum Dums, the lollipop sticks?

JIANG: What about the sugar beet truck drivers, the tractor salesmen? What will happen to them if farming goes overseas?

CHACE: Is there a way the government can come up with the most fair policy to both of these quintessential American industries - farming and manufacturing? And we asked the guy who's in charge of the sugar program here in the United States, the sugar kommissar, chief economist at the USDA itself, Dr. Joe Glauber, how do you arbitrate what's fair?

JOSEPH GLAUBER: Well, you never ask an economist about what's fair or not. I mean, I - you know, it's a highly regulated market. And, you know, generally I think as an economist, you know, I certainly would prefer a free market.

CHACE: Joe Glauber is the guy whose job it is to manage the sugar supply in this country in order to keep up the price support. And he's basically saying his job should not exist. The government's - really, his - hands should be off the wheel, but...

GLAUBER: In this case, this is something where Congress feels that sugar producers should be protected from the world market.

JIANG: Congress continues to address the question of sugar. There are competing bills - one on the candy maker side, a sugar reform bill, that tries to dismantle a lot of the sugar program. That's a bill that shows up pretty regularly on the Hill and it's never passed.

CHACE: Of course, there's also a new farm bill that will just extend the sugar program we have now. It's expected to pass. And if it does, it means we will continue to get our candy canes from Mexico and our sugar from Minnesota.

(SOUNDBITE OF SONG, "POUR SOME SUGAR ON ME")

DEF LEPPARD: (Singing) Pour some sugar on me, ohh, in the name of love. Pour some sugar on me - come on, fire me up...

CHACE: Just one quick announcement before we go, which is that we have some big, big news about PLANET MONEY's long dormant T-shirt project. So this project about making a T-shirt, it started back in May of 2010. It is now almost May of 2013. It's time for an update. It is a big one. We are very excited. We will have that for you next week.

JIANG: As always, send us email at planetmoney@npr.org or leave us a comment on the blog, npr.org/money.

CHACE: Find us on Facebook or Twitter - I'm Zoe Chace.

JIANG: And I'm Jess Jiang - thanks for listening.

(SOUNDBITE OF SONG, "POUR SOME SUGAR ON ME")

DEF LEPPARD: (Singing) You got to squeeze a little, squeeze a little, tease a little more. Easy operator come knocking on my door. Sometime, anytime, sugar me sweet - little miss innocent sugar me, yeah. Yeah, give a little more - take a bottle, shake it up, break the bubble, break it up. Pour some sugar on me, ooh, in the name of love. Pour some sugar on me - come on, fire me up. Pour your sugar on me...

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