Mexico sugar deal hard to swallow for last US candy cane maker
NEW YORK: For the last US-based manufacturer of the red and white striped candy cane that is a ubiquitous North American holiday season treat, the sugar supply deal struck between Mexico and Washington is anything but sweet.
The competitors of Ohio-based Spangler Candy Co have, over the years, moved their plants south to Mexico and beyond to gain unfettered access to the cheaper sugar supplies there.
That was part of a shift in manufacturing out of the United States that President Donald Trump has vowed to reverse.
Spangler’s Chief Executive Officer Kirk Vashaw has kept the candy cane industry alive in the United States at his plant in Ohio, where his firm churns out 200 million candy canes a year.
But the new sugar supply deal will make things tougher still for Spangler, as an agreed rise in the minimum price for Mexican sugar will drive up Spangler’s raw material cost.
“To be honest, I’m just very disappointed that the Trump administration didn’t do more to level the playing field, which is something they promised over and over again to do for the American worker,” Vashaw said in a phone interview with Reuters.
“This was an opportunity to do that, and they didn’t.”
The firm is one of a wide range of food producers, drinks makers and cereal manufacturers across the country that will see sugar input costs higher by about US$1 billion above government support prices, according to the Sweetener Users Association.
Many of those companies, who oppose the government’s support for the sugar industry, will have to consider whether to pass that rise in costs on to consumers.
The additional cost is a fraction of the value of the packaged food industry, estimated at around US$373 billion in 2016, according to data provider Euromonitor International.
Food and beverage firms such as Hershey Co, General Mills Inc, J.M. Smucker Co, Mondelez International Inc will be impacted because they are all companies for which sugar is a key raw material. — Reuters