When Sweet Turns Sour: How A Union Lockout Is Threatening One Of The Most Powerful Lobbies
Al Franken issued a staunch warning late last summer.
The Democratic senator from Minnesota cautioned that a union lockout could put support for a popular agricultural policy in the Farm Bill in jeopardy—and he may be right. There are already signs that the lockout of 1,300 workers at American Crystal Sugar Co. in the Midwest will erode support for the decades-old Sugar Program, which typically has had both Democrats and Republicans on board.
The Bakery, Confectionary, Tobacco Workers and Grain Millers Union, which represents employees of the sugar industry, said they’ll break a long-standing tradition of fighting for support of the Sugar Program alongside American Crystal.
Instead, they’re planning to lobby against it.
Franken said in an August op-ed for the Minnesota Independentthat the lockout “threatens to tear at the fabric of this partnership” between labor, farmers and the company, and such a situation would alienate pro-labor members of Congress from supporting the Sugar Program. The federal policy helps subsidize the costs of sugar through a system of price and import quotas, tariffs, and restrictions on how much foreign sugar may be used by companies domestically. As a result, the price of American sugar is at least twice the world price.
In the fall, another supporter of the Sugar Program in Congress issued a warning as well. Sen. Kent Conrad (D-N.D.), a senior member of agriculture committee, said “[American Crystal]needs to think long and hard about the consequences, about the implications of their strategy.”
After meeting with Franken in January, John Riskey, the president of BCTGM Local 167G, released a statement saying: “We believe Crystal Sugar’s determination to break our union could drag down the whole sugar industry.”
While union workers making salaries of $30,000 a year argued against benefits that would’ve resulted in an effective 8 percent pay cut, American Crystal CEO Dave Berg collected a whopping $375,476 raise in 2010, bringing his annual compensation to $1.975 million. Other top executives at the corporation also saw five- and six-figure salary raises.
Yet American Crystal only offered its growers a raise of slightly more than 1 percent, despite a record setting sugar beet crop in 2010 that bagged $800 million in profits for the company.
The National Labor Relations Board dismissed a complaint from the sugar workers in 2011, and negotiations hadn’t improved since then. And a petition with 33,000 signatures asking for a return to the bargaining table was flatly ignored in February.
“They told us on Monday that they're done negotiating,” Riskey said after announcing they will lobby against the Sugar Program. “So, if they're done negotiating with us and they don't want to give us a fair contract and they won't let us in there to work, we will work against the sugar program.
Big Money From Big Sugar Across Party Lines
MSNBC host Ed Schultz doesn’t often call out Democrats on his show, but he made an exception over the labor dispute with American Crystal.
Schultz didn’t criticize anyone in Congress during a segment in December—that is, except for Rep. Colin Peterson (D-Minn.). That’s because Peterson’s campaign coffers have taken more from American Crystal than any other member of Congress as the second biggest contributor—at $99,785—through his Congressional career. So despite the lockout, he recently said, “I believe in the Sugar Program,” and he promised to support it.
American Crystal puts more money toward lobbying Congress than anyone else among Big Sugar. According to their financial disclosure reports, the company gave $1.16 million to 177 House and Senate candidates in 2011 alone—and that’s on top of a million-dollar effort to lobby those already in Congress. In doing so, they focus on key members of the agricultural and energy committees: the ones with significant say on the Farm Bill, which is reworked every five years.
But now the union representing the locked-out workers will lobby against the Sugar Program, joining a growing coalition of strange bedfellows. Groups like the U.S. Chamber of Commerce, the Everglades Trust, the American Baker’s Association, and the American Enterprise Institutehave already begun pushing to dramatically overhaul sugar policy. The labor union even finds itself on the same side as a Florida wing of Americans For Prosperity, a group largely funded by the billionaire libertarian Koch brothers.
Members of Congress have been calling for a reform of sugar policy even before the union lockout. Sen. Jeanne Shaheen (D-N.H.) teamed up with Sen. Mark Kirk (R-Ill.) to push for the SUGAR Act. Others leading the push for reform of the Sugar Program include Reps. Joe Pitts (R-Pa.), Danny Davis (D-Ill.) and, of course, Sen. Dick Lugar (R-Ind.) who has been opposed to the Sugar Program throughout his career in the Senate.
Costs On The Companies Making Candy
The U.S. Commerce Department found [PDF] that for every job saved in the sugar industry by the Sugar Program, three jobs in the food processing and confectionery industries are lost.
Confectionery companies and other businesses that use sugar are lobbying Congress to push for repeal. A Commerce Department report [PDF] noted a trend of companies like Brach’s and Hershey’s closing plants in Colorado, Illinois, and Pennsylvania and outsourcing the work to Canada and Mexico, causing thousands of American workers to be laid off. Chicago, for instance, lost a full 27 percent of its workforce in sugar-using-manufacturing between 1991 and 2001.
“Chicago is home to several of these confectioners and I have seen the devastating effects of this flawed sugar policy,” Davis said in a statement. “This ... should be taken seriously and move the Congress to act.” Shaheen had a similar tone, calling the federal sugar policy an “antiquated government spending program.”
Chicago was once the candy capital of the country, boasts Dean Sprangler, who heads the candy company that makes Dum Dums and Circus Peanuts.
“Brocks, Farley, Gilliam,” Sprangler said, rattling off names of companies who have had locations in or near Chicago. “These are companies I knew as a kid growing up; I saw their factories.”
Sprangler is the third generation to run his candy company. He told Campus Progress that he wants to keep his business located in Ohio, where he grew up, but says it’s getting increasingly tougher to not move operations to Mexico.
“Once sugar manufacturing jobs leave the country,” he says, “they aren’t coming back.”
Sprangler added during an interview that sugar is about 8 percent of his company’s total cost, and the price keeps going through the roof. In 2009, some businesses reported the cost rising by 10 percent in one year alone.
Yet, according to the American Sugar Alliance, it’s a different story. They claim that there have been fewer sugarmills, refineries, and plants closing under current U.S. sugar policy.
“Candy companies aren't exactly struggling, it’s a recession-proof industry,” Phillip Hayes, a lobbyist for the American Sugar Alliance, insisted in an interview with Campus Progress. “They’re expanding their operations, and we’re happy for them, because they’re our customers.”
About the rising costs of sugar in recent years, Hayes said that “sugar is a unique commodity, the most volatile commodity market in the world,” and he maintained that sugar prices in the U.S. would’ve been higher without the Sugar Program. Hayes added that the quality is much lower for sugar from Mexico, so companies are better off quality-wise to stick with U.S. sugar.
Hayes’ argument may be the one Franken ultimately sides with. Despite Franken’s warning against the labor disputes with American Crystal threatening the future of the program, he was happy to pose for a photo recently with Beet Farmers who benefit from U.S. Sugar policy. Franken and his Democratic colleagues assured those farmers the sugar policy would remain intact for the 2012 Farm Bill.
Meanwhile, 1,300 American Crystal union workers in the Midwest are still locked out—and promising to lobby to gut the policy that helped American Crystal rake in major profits while neglecting its workers.
Tyler Kingkade is a staff writer with Campus Progress. Keep up with him on Twitter @tylerkingkade.