Coca-Cola, Hershey Lose Senate Vote to Curb Sugar Assistance

Investing

Published: May 23, 2013 12:40 pm

Last Updated: April 27, 2020 7:16 pm

In one of the longest running lobbying battles in Washington, sugar growers have once again prevailed over big food and beverage makers like Hershey Co. (NYSE: HSY) and The Coca-Cola Co. (NYSE: KO) in a vote to cut government aid for sugar producers. The vote came on a proposed amendment to the new five-year Farm Bill, and sugar won the day, 54 to 45.

Sugar producers argue that the price supports for sugar helps support more than 140,000 U.S. jobs in 18 states, and it backed up its arguments with more than $5 million in contributions to candidates for national office in the last election.

The food and beverage industry argues that the government support for U.S. sugar growers forces food and drink makers to pay more for sugar, a cost that is then passed on to consumers. Industry lobbyists kicked in more than $8.3 million in contributions to candidates, political parties, and other groups according to a report in The Wall Street Journal.

We noted in early April that the U.S. Department of Agriculture will decide by the first of July whether or not it will purchase up to 400,000 tons of surplus sugar which it will then sell at a discount to ethanol producers. The cost to taxpayers is expected to be around $80 million.

U.S. food and drink makers — and U.S. consumers — pay about 50% more for sugar than the world price according to the WSJ.

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