824—Lancaster Farming, Saturday, December 19,1981
Corn sweeteners add challenge to sugar markets
LANCASTER
“sweet tooth” has been more
demanding than ever in recent
years, but this news brings little
cheer to beet and Cane sugar
producers. They’re caught in a
double-bind, with stiff foreign
competition on one side and a
home-grown corn product on the
other, according toFarmline News
Service of the USDA.
Of the two, the bigger challenge
probably comes from the corn
product, High Fructose Corn
Syrup. HFCS has been a major
success since it was commercially
introduced in the U.S. in 1967.
In 1970, per capita consumption
of HFCS was only seven-tenths of a
pound per year. It rose steadily to
19.1 pounds in 1980 and an
estimated 23 pounds in 1981,
Meanwhile, consumption of
refined sugar declined from 101.7
pounds per capita to less than 80
pounds today.
For sugar producers, these
figures are cause for concern.
Sugar wasn’t able to hold its own
even in a market expanding faster
than the population, and that
market may not be growing as
rapidly in years ahead.
The average American now
consumes almost 126 pounds of
sugar and sweeteners a year.
That’s a staggering 35 teaspoons a
day—most of if (75 percent) in
baked goods, soft drinks, and other
processed foods.
These numbers are among the
highest in our history (the peak
was in 1979 at 127.5 pounds).
Ten years ago, we averaged only
about 124 pounds a year. But our
use of sweeteners appears to have
stabilized, and, by 1985, Americans
will probably add only another
half-pound of sugar and
sweeteners to their diets, ac
cording to USDA economist Bob
Barry.
“Greater health consciousness,
attention to diet, and a small
portion of the population in the
sugar-craving ages of 10 to 25
years are the reasons,” Barry
says.
According to Barry, corn
sweeteners (including glucose,
corn syrup, dextrose, but mostly
HFCS) now account for about one
third of total domestic
sugar/sweetener use, up from 16.7
percent 10 years ago. And, largely
because of the anticipated increase
in HFCS use, forecasters say that
this figure could rise to about 43
percent of the market by 1985.
This is bad news for sugar
producers and processors. “The
SELL
IT
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A
LANCASTER
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bottom Ime will be a reduction in
the overall size ot the sugar in
America’s
dustry,” Barry says.
On the other hand, present
technology probably can’t take
corn sweeteners much further than
a 50-percent share, leaving half the
total market to traditional sugar.
Corn sweeteners have been
steadily gaining on sugar’s
markets for one major reason:
cost. It costs only half as much to
make HFCS from com as it takes
to make sugar from cane or beets.
Plus, we grow all the corn we
need right here in the U.S.
Although energy costs in the corn
wet-milling process are high, the
corn itself is the single most ex
pensive input, and corn prices
(adjusted for inflation) have been
reasonably stable over the last
decade. For the sugar industry, it’s
another story. Only about halt the
cane and beets we process into
sugar are grown domestically;
beets mostly in Florida and cane in
Hawaii and Louisiana. The rest are
imported mostly from Latin
America and the European
Community.
Because the government ot most
exporting countries have lower
environmental and safety stan
dards, much lower or no minimum
wage laws, and subsidies for their
cane and beet growers, prices on
the world market are sometimes
substantially lower than domestic
prices. This is especially true
during periods of sugar gluts.
A prime example is the
European Community-the most
highly protected agriculture in the
world—which is currently
estimated to have an export sur
plus for 1981/82 of 4 to 5 millon tons.
This creates a lot of instability in
the American industry. While U.S.
producers may want to sell as
much sugar as possible and reduce
imports, most refiners want to
buy.
So, producers are looking to the
government for protection.
Specifically, the growers want a
government-guaranteed program
of loans with sugar as collateral,
which, in effect, would provide a
minimum domestic price level for
sugar.
But many refiners see it dif
ferently. They say the major
unpact of government loans would
be much higher domestic prices to
consumers and much smaller
domestic sugar consumption in the
long run.
Higher world prices would be
self-defeating according to
refiners because sugar users
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might switch even more quickly to
the alternative; corn sweeteners.
Some sugar refiners aren’t
taking any chances with the shaky
sugar situation and have diver
sified into other businesses, in
cluding some processing ot corn
syrup.
For processors who are wet
millmg corn, the time is right.
Through 1980, the industry has
expanded its production. But the
development ot the new HFCS 55-
percent-tructose-content product,
high sugar prices, and last year’s
decision by major soft drink
companies to replace some of the
sugar in their products with HFCS,
has changed the industry’s
outlook. The word is expansion,
and the industry can handle it.
There are currently 26 corn wet
millmg plants operating, or soon to
be operating, in the U.S. Seventeen
have been built just since 1960. All
ot the plants are modern facilities,
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And, according to Barry, HFCS
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“Wet-milling corn has many
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"It’s a complex, multi-taceted
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corn.”
Does the country produce
enough corn to satisfy the
sweetener industry’s growing
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livestock feed supplies?
•‘Yes. Right now, we expect the
1981 crop to be a record, and the
sweetener market may take about
4 or 5 percent of it. By 1985, usage
should be up to 6 percent. Supplies
should not be a problem in the
foreseeable future,” Barry says.
But he adds that com sweeteners
can’t do everything sugar can do.
While HFCS is as sweet as sugar in
many uses, some ice cream
manufacturers- will stick with
sugar because it freezes at a
slightly higher temperature than
corn sweeteners. Bakers will
probably use sugar in cakes and
similar products because HFCS
turns brown when baked.
Also, HKCS is just too sticky for
most candy. "HFCS makes up only
about 1 percent of the sweeteners
used in the confectionary industry.
With presertt technology, 1 to 5
percent is about as far as it can
go,” Barry says.
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