Small confectioners grappling with shortage of sugar and its rising costs

CHICAGO - You may find yourself opening your wallet a bit wider for sweet treats this holiday season. Costs are on the rise for many businesses thanks to shortages and import restrictions on the U.S. sugar industry.

In a FOX 32 special report, Dawn Hasbrouck takes a look at the push to sweeten the supply.

Graham’s Chocolates in Geneva is a go-to stop for many, especially during the holiday season.

"I think it kind of makes the tradition. I mean part of your holiday don’t you think," said Pamela Schodeen, a customer of Graham’s Chocolates. "Yeah, I don’t know, we do. I guess but we have them here so."

Schodeen says her grandkids love their s'mores and so much more.

"And the chocolate pretzels are amazing too so you can’t go wrong," she said.

The shop has been in business since 1987, serving up all kinds of delicious, sweet treats.

"Our skälies are maybe the best thing that we serve here. And then we also do carmel squares, salted carmels," said Jayni Wunderlich, CEO of Graham’s Chocolates.

According to Wunderlich, chocolate is big business.

"For one pound samplers and our regular samplers, I mean we sell probably 50,000 a year, something like that. A lot," Wunderlich said.  

Graham's ships nationwide to satisfy your sweet tooth no matter where you are. Those big numbers are common across the industry according to the National Confectioners Association.

"Last year we saw $42 billion in confectionary retail sales which is a double-digit increase from the year prior," said Carly Schildhaus, spokesperson for the National Confectioners Association.

Schildhaus says consumers love for sweets did not wane during the pandemic.

"It's a small, affordable, accessible, and transparent treat for people across the country as they're looking for little ways to sweeten their lives," Schildhaus said.

And while there's no shortage of demand, there is another shortage happening. It involves a key ingredient for almost all food manufacturers.

"In the United States, we need about 12 million tons of sugar for the food manufacturing industry. And currently, due to this outdated policy, there's only 9 million tons of that sugar, so what we're looking at is a big challenge for food manufacturing and it very much impacts the confectionary industry," according to Schildhaus.

Sugar isn't used in just candy and cookies, but everything from cereal to pasta sauce to yogurt.

"Manufacturers across the country are experiencing a significant sugar supply shortage. And it's all directly related to the sugar policy that we have here in the United States. It's the direct descendent of the 1934 Sugar Act," said Grant Colvin, executive director for the Alliance for Fair Sugar Policy.

According to Colvin, it all comes down to how much sugar can be produced domestically and how much is allowed to be imported based on U.S. law.

"We have a limit on what we can produce domestically. That's just written into the law," Colvin said. "So American sugar businesses can only produce so much sugar every year and maintain compliance with our sugar policy. It's also the case that it's incredibly difficult to get sugar in a timely way from partners oversees."

Under current rules, the U.S. must grow 85% of its sugar supply and can only import 15% from overseas.

"Day to day in the U.S. we pay two to three times more for sugar than the rest of the world. That's a really significant issue and that of course will be passed along in the form of higher prices," Colvin said.

"Since the pandemic we've seen a huge increase in pricing all over the board," Wunderlich said. "Sugar itself, we use sugar in all different forms here [Graham's Chocolates]. We use invert sugar which has gone up 3.5%. We've seen regular granulated sugar and brown sugar gone up about 10%. And just even powdered sugar, up 10% as well."

The concern for small businesses like Graham's is that they could struggle to compete with larger companies for a share of a finite supply.

"What if a larger company buys up all the sugar that maybe we would be using or that would be allocated for us," Wunderlich said. "It's hard for us. We can't just change an ingredient. It could certainly affect our recipe and these recipes that we have, have been tried and true for 35 years. We haven't noticed a huge change for us so far. And I'm just hoping that stays the same."

"This is a big issue, certainly for Illinois where 50,000 of those workers are based," Colvin said. "But 700,000 workers across the country all experiencing the supply shortages. That's not good for the manufacturers, the workers of course. But also everyday Chicagoans who are seeing higher prices at the grocery store."

"We are talking to anyone and everyone about the ways in which the current outdated sugar program impacts business throughout the country," Schildhaus said.

Based on a recent review of the U.S. sugar policy, the federal government's accountability office says it recommends the United States Department of Agriculture evaluate its method for restricting imports.

The Alliance for Fair Sugar Policy is calling on Congress to make changes to the current policy as part of the 2023 Farm Bill.