Sugar Policies and Added
Sugars in US Diets
Have Farm Policies Made Us Consume
More Sweeteners?
Helen Jensen and John Beghin
Iowa State University
April 2007
Introduction
• Increase in dietary intake of sweeteners
• Shift from sugar to other sweeteners
• Factors linked to change in sweeteners
– Farm policies that lead to “cheap” ingredient
sweeteners
– Low cost retail prices for sweetened beverages
– Consumer demand for convenience, sweet tasting
foods
Introduction
• Public health concerns
– Health effects from high share of calories
– High Fructose Corn Sweetener (HFCS)
contributes to high intake
– Excess calorie intake linked to obesity
• Public policy response
– Dietary guidance
– Limit access in food and school programs
Issues addressed
• What is the influence of farm policy on
changes in added sugar in the US diet?
• Has farm policy contributed to the
change in sweetener consumption and
composition?
• What is its contribution today?
Figure 1. Per capita sweetener deliveries
Sugar use per capita has fallen; corn-based sweetener use has
increased. Total sweetener use peaked in 1999. HFCS use explains most
of the corn-based sweetener use.
160
140
sugar
corn
total
HFCS
pounds dry weight
120
100
80
60
40
20
0
66
19
69
19
72
19
75
19
78
19
81
19
84
19
87
19
90
19
93
19
96
19
99
19
02
20
05
20
Figure 2. Industrial use of sugar by product group
Baked and cereal products have become the most important
industrial users of sugar. Beverage products used to be but that use
collapsed after 1978.
3000
baked and cereal products
confectionery
2500
ice cream
beverages
canned bottled & frozen foods
1500
1000
500
0
19
49
19
52
19
55
19
58
19
61
19
64
19
67
19
70
19
73
19
76
19
79
19
82
19
85
19
88
19
91
19
94
19
97
20
00
20
03
20
06
1000 st
2000
Changes in final demand
• Sweetening of the World’s diet
– Popkin and Nielsen, 2003
– Increase in soft-drinks and sugared fruit drinks
– Caloric sweeteners as increased share of calories
and carbohydrates
• Rising income and urbanization
• Industry influence on serving size,
convenience products (vending machines)
• Product attributes that favor HFCS
Table 1. Intake of total added sweeteners as gram-equivalents and
as percentage of total energy, 1994-96
Mean Intake of total added sweeteners
Age-gender group
Gram-equivalents
% of total energy
2-5 y old children
60.9
15.9
6-11 y old children
90.7
18.6
12-17 y old females
97.7
20.1
12-17 y old males
141.8
20.4
18-34 y females
81.9
17.9
18-34 y old males
115.0
16.8
35-54 y old females
63.9
14.9
35-54 y old males
92.1
14.4
55-64 y old females
51.2
12.8
55-64 y old males
70.2
12.7
65+ y old females
44.9
12.4
65+ y old males
57.5
11.6
Total population, 2 y
and older
82.2
15.8
Source: Guthrie and Morton, 2000
Table 2. Intake of added sweeteners by food category, people aged 2 yrs and older
Mean intake
(gramequiv.)*
% of
total
intake
3.6
10.6
4.4
12.9
Fruit/fruit juice
1.1
1.3
Vegetables (candied sweet pot., glazed carrots)
1.1
1.3
Milk/milk products
7.1
8.6
Meat, poultry, fish, dried beans, eggs
1.7
2.1
Fats/oils
0.7
0.9
Sugars/sweets (table sugar, honey, syrups, candies, jams, gel desserts)
Soft drinks, regular
Soft drinks, low calorie
Fruitades/drinks, regular (fruit punch, fruit juice drink)
Fruitades/drinks, low calorie
13.2
27.1
0.1
8.0
<0.1
16.1
33.0
0.1
9.7
<0.1
Other beverages
3.0
3.6
Food category and examples of foods containing added
sweeteners
Grains
Breakfast cereals (presweetened cereals)
Sweetened grains (cookies, cakes)
Sugars, sweets, sweetened beverages
*Gram-equiv. is an amount of added sweeteners comparable in carbohydrate content to 1 g sucrose.
Source: Guthrie and Morton, 2000
Figure 3. Relative retail food prices
Aggregate food prices have risen much faster than the price of
carbonated drinks, slightly more than the price of sweets, and have
slightly fallen relative to the price of baked goods
1.5
food/carbonated drinks
food/cereal and baked goods
1.4
normalized price (1982-84=`)
food/sweets
1.3
1.2
1.1
1
0.9
0.8
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
Food processing
• Increase in processing share and fall in farm
share of final food price
• Emergence of added sweeteners in food
processing
• Rise in use of HFCS
• Less substitution in processing between
HFCS and sugar
• Low price responsiveness in derived and final
demand
– Small cost share explains lower price responsiveness (Marshall’s
rules)
Figure 4. Food price, farm price, and
farm-retail price spread evolution
(1952=100)
900
800
retail food price index
700
index of farm prices received
normalized price
farm-retail price spread
600
500
400
300
200
100
0
1952 1956 1960
1964 1968 1972 1976
1980 1984 1988
1992 1996 2000
Figure 5. Farm value share in retail cost for
processed food products
70
Bakery and cereal products
60
Fresh vegetables3
Meat products
Dairy products3
value share (%)
50
40
30
20
10
0
67 969 971 973 975 977 979 981 983 985 987 989 991 993 995 997 999 001021
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
19
202
Correlation of US sugar prices
Time period
Retail,
wholesale
refined
Wholesale
refined, raw
Retail, raw
1960-1981
0.97
0.99
0.94
1982-2006
0.44
0.58
0.14
1995-2006
0.60
0.65
0.01
Correlation of corn, HFCS and
carbonated drinks prices
HFCS,
carbonated
drinks
-0.30
Corn, HFCS
1978-2006
Corn,
carbonated
drinks
-0.21
1978-1992
-0.06
0.51
0.47
1993-2006
-0.28
0.07
0.33
0.42
Agricultural policies: R&D
• Ag R&D affects commodity prices
– Price (indicator of technical change) trends down
for most ag commodities
– Corn price has fallen faster than sugar price
– Price of HFCS has fallen over time and lowered
unit cost of sweeteners
• Limited but ambiguous impact of agricultural
subsidies (and tax) on food intake
Figure 6. Falling real farm prices of corn and sugar beets
(nominal farm prices deflated by the index of prices paid by
farmers) Corn falls more than twice as fast as beet does.
3
ND beet price
2.5
IA corn price
-0.0186x
Expon. (IA corn price)
2
R = 0.6662
Expon. (ND beet price)
2
1.5
-0.0069x
y = 1.2171e
2
1
R = 0.4796
0.5
0
19
24
19
28
19
32
19
36
19
40
19
44
19
48
19
52
19
56
19
60
19
64
19
68
19
72
19
76
19
80
19
84
19
88
19
92
19
96
20
00
20
04
normalized price 1963=1
y = 2.0201e
Figure 7. Nominal sweetener price faced by food
processors. HFCS price has fallen over time and
has lowered the unit cost of sweeteners
45
composite sweetener price
40
refined sugar price
HFCS price
35
$ per pound
30
25
20
15
10
5
0
66
9
1
69
9
1
72
9
1
75
9
1
78
9
1
81
9
1
84
9
1
87
9
1
90
9
1
93
9
1
96
9
1
99
9
1
02
0
2
05
0
2
Agricultural policies: R&D
• Corn
– R&D policies and costs of corn price policy
have been borne by taxpayers
– Benefits of lower corn prices mainly
through lower feed costs to dairy and meat
• Sugar
– R&D policies and price policies have
maintained higher prices relative to corn
– Price policies borne by consumers
US corn and sugar farm policy support
1986-88
1997-99
2002-04
Producer NAC
1.64
1.32
1.26
Consumer NAC
0.88
0.86
0.82
Producer NAC
2.46
2.39
2.19
Consumer NAC
2.96
2.75
2.59
US corn
US sugar
Source: OECD
Food programs and policies
• Dietary Guidelines (2005)
– “Choose and prepare foods and beverages with
little added sugars or caloric sweeteners”
• National School Lunch and Breakfast
Program
– calorie but no sugar restrictions
• Food Stamps Program
– No limits on specific foods or food types
• WIC Food Program
– Limit on sugar content of cereals
Other countries
• Increase in intake of sweeteners worldwide
– Faster increase in middle income countries
• Policy vs. culture?
– Similar EU policy across countries and high sugar
prices
– Per capita intake varies (UK vs. France)
• Mexico
– Rise in consumption of sweeteners
– Soda tax on sweetener composition had sharp
effect on processing use
Table 3: Changes in sweetener consumption by major regions for 1970-75 and 1999-2001
Average 1970-75
Average 1999-2001
Percentage change
1970-75 to 1999-2001
(kilocalories per capita per day)
Total
sugar1
Other
sweeteners
Total
sweeteners2
Total
sugar
Other
sweeteners
Total
sweeteners
Total
sugar
Other
sweeteners
Total
sweeteners
World
210.65
9.24
221.55
217.32
23.32
242.32
3.17
152.38
9.37
Developed
396.79
24.63
425.39
322.18
89.77
416.26
-18.8
264.47
-2.15
Developing
136.29
3.08
140.13
188.12
4.81
193.88
38.03
56.17
38.36
USA
464.34
100.74
569.1
328.77
328.6
662.3
-29.2
226.19
16.38
Mexico
383.91
1.82
388.02
439.82
28.8
471.4
14.56
1482.42
21.49
Source: FAOSTAT
Refined sugar user price distortions in some OECD countries
from agricultural policies (NAC) measured at the farm gate
4.5
Australia
European Union
4
Mexico
United States
NAC (no distortion=1)
3.5
OECD
Japan
3
2.5
2
1.5
1
0.5
0
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
Summary and lessons learned
• Historically, link between agricultural
policies and sweeteners was stronger
than it is today
– Until 1980, R&D led to cheaper inputs and food
– Today, less direct effect in sweeteners market
– Relatively large fall in corn prices (relative to
sugar) allowed emergence of cheaper HFCS as a
substitute for sugar
• Lesson
– The “unintended consequences” of commodity
and R&D policies on sweeteners use are small
Summary and lessons learned
• Falling farm value share at the retail level
makes ag input costs inexpensive relative to
other input costs in food processing
– Today: tenuous link between farm/commodity
policy and cheap food input for sweetened goods
• Lesson: Using farm policy to influence food
prices or ingredient inputs is a poorly targeted
policy for sweeteners
Summary and lessons learned
• Rise in sweetened beverage consumption driving
change in U.S. and other countries
– Sweetened beverages lead increase in HFCS use
• Lesson: Policies focused on consumption of foods
better targeted & more effective for public health
– Limited ability of taxes to change food demand
– Some ability of taxes for ingredient switching
• Nonlinear tax on food/beverages exceeding some threshold of
added sugars
– Non-price approaches more effective
• Limit access to foods (vending machines)
• Food program regulations
• Nutrition education