JESS JIANG, HOST:
Hi, Jess Jiang here. We originally reported this show back in 2013, and now we have an update for you at the end.
(SOUNDBITE OF ARCHIVED BROADCAST)
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.
JIANG: But lots of people don't know where they come from.
DEAN SPANGLER: Do you like orange?
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?
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 hairnets.
SPANGLER: Here are the 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 100,000 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 - eight 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, it definitely wouldn't.
CHACE: It's the sugar that does that.
SPANGLER: The sugar is - 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 Walmart's 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 reason. 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 ask 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. These 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 a 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 LEWIS DRANSFIELD'S "SOMETHING NEW")
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 LEWIS DRANSFIELD'S "SOMETHING NEW")
CHACE: Before we dive in, here's 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 100,000 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 that? 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. I'm just going to read this one part that 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 wasteland.
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 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 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 is 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 a 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 up 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.
PETERSON: It wouldn't make any difference.
CHACE: Well, how do you know?
PETERSON: 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: Crow Bar 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: Smells like money - exactly.
HANSEN: Smells like money.
LANG: It smells like money. so...
HANSEN: It does. It's a bad, bad smell.
LANG: No, it's - but it smells like success. It smells like people are getting shoes on kids' feet. It smells like we're building stuff. And a 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. When you 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 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 commissar, chief economist at the USDA itself, Dr. Joe Glauber. How do you arbitrate what's fair?
JOE GLAUBER: Well, you never ask an economist about what's fair or not. I mean, 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 MUSIC)
JIANG: Hey. It's Jess back here in present day. Since we ran the show originally, that farm bill passed in 2014 - it left the sugar subsidies pretty much the same. We checked back in with economist Daniel Sumner. And he said those sugar reform bills also went nowhere.
SUMNER: Things have gotten a little more complicated. But, really, nothing has changed of any substance. And I credit for that a remarkable job done by the sugar lobby.
JIANG: But with all this talk these past few weeks around protecting American industry from foreign competition and steel and aluminum tariffs in the news, Daniel says he's hearing a bunch of politicians who are usually harsh on trade changing their tune.
SUMNER: Interestingly enough, those tend to be politically anti-Trump. And so it's possible we can put together a coalition of people who are frustrated with Mr. Trump to actually change some things about sugar policy.
JIANG: Daniel says he's optimistic but doesn't see change happening anytime soon. We also checked back in with Spangler, the candy makers. They said they are still churning out those Dum Dum lollipops in the U.S. and candy canes in Mexico. And that fifth-generation family member who was an intern back in 2013 - she's not working for the company right now. They have this rule. Family members have to work somewhere else before going full-time at Spangler. But they tell us she may be back someday.
(SOUNDBITE OF MUSIC)
JIANG: If you want to comment on today's show, head over to our Facebook page. There, we also have a brand new PLANET MONEY shorts video. It's a story of how that chip got into your credit card and why it took so long. And you can see Kenny Malone dressed up as a French fraudster and a couple of us dressed in chic '60s clothing. The videos are also online at npr.org/planetmoneyshorts. We're on social media everywhere as PLANET MONEY. Today's rerun was produced by Aviva DeKornfeld. I'm Jess Jiang. Thanks for listening.
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