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> No doubt people will arrive shortly to knee-jerk against sugary drink taxes; but would they mind explaining why sugar is made artificially cheap to start wit

by Lazare 6y ago

> No doubt people will arrive shortly to knee-jerk against sugary drink taxes; but would they mind explaining why sugar is made artificially cheap to start with? It's a bit more complicated than that. US agricultural policy subsidises corn production (driving prices down), but US trade policy keeps cheap sugar out of the country, while US energy policy diverts corn into making biofuels, both of which drive prices back up. It's not clear what the net effect is. Even the impact of corn subsidies alone does not seem to be enormous, however. Some estimates have corn subsidies driving the cost of corn down by ~27%, with flow on effects to the prices of meat, dairy, and yes, HFCS. However, HFCS make up ~3.5% of the cost of a soft drink, and the cost of corn is less than half the total cost of making HFCS, which means the total impact of corn subsidies on the price of a soft drink is a couple of pennies. In other words, if we wanted a sugary drink tax to counteract the impact of corn subsidies in the US, it would probably need to be on the order of 1-2%. Would a 1% tax have any measurable impact on consumption? Unlikely. Meanwhile, Australia has no subsidies, mostly uses sugar (and not HFCS) but has the same obesity patterns as the US. Analysis of obesity and agricultural policy across countries finds no trends. Source: https://grist.org/article/farm-subsidies-bitter-and-sweet/ https://grist.org/article/farm-subsidies-bitter-and-sweet/ Also, small point: > This had the side effect of sugar being a cheaper food ingredient than most of the alternatives, even in countries that didn't directly import HFCS (since the US was no longer removing as much raw sugar from the market, driving down costs). Only in the short term; that effect would have ended years ago. The global price of sugar now is driven by the marginal cost of production in Brazil, mostly. Americans don't consume (much) imported sugar, but they also don't export much HFCS, and most of what they do export goes to a single country (Mexico). There's no glut of "sugar the US would have consumed" on the market. Second, global sugar prices have been pretty flat for the last 20 years; I don't think your link 3 is really showing what you say. You can poke at the chart here: https://www.macrotrends.net/2537/sugar-prices-historical-chart-data https://www.macrotrends.net/2537/sugar-prices-historical-cha... but I'm not sure what I'm meant to be seeing.

mc32 6y ago
For anecdotal support, let's walk over to Starbucks. The drinks aren't cheap and people pile on the sweet options. You even have the option of no sweetener (which few people take advantage of). I can see if, Sweetened drink = $8.00 Unsweetened = $4.00 And take away the sweetener packets. Yes, that would likely have an effect.
- chucky_z 6y ago
  IIRC, a 12oz coffee is ~$2. The equivalent 12oz coffee milkshake is ~$4. Guess which one is more popular? That said, I do actually buy the non-sugary drinks because they're cheaper. I tend to buy Blonde Americanos to get the lowest bitterness espresso flavor from them, at the lowest price.
- deleted 6y ago
  [deleted]
maccard 6y ago
> However, HFCS make up ~3.5% of the cost of a soft drink, and the cost of corn is less than half the total cost of making HFCS, which means the total impact of corn subsidies on the price of a soft drink is a couple of pennies. The actual cost of manufacturing a soft drink is in the order of pennies - [0] does a breakdown where the numbers are likely wrong but in the right ballpark. An increase of a few c per litre in tax at the production level would have a huge knock on effect on the price of the drinks, unless the manufacturers eat the increases. Customers are also hugely price sensitive, an increase of a few pence can have a massive change on purchasing patterns. [0] https://www.quora.com/How-much-does-it-cost-to-manufacture-355-ml-12-fl-ounces-of-Coca-Cola-Do-we-pay-much-more-than-that-What-accounts-for-the-difference-How-do-they-get-so-many-people-to-pay-so-much-more https://www.quora.com/How-much-does-it-cost-to-manufacture-3...
- RobAtticus 6y ago
  >Customers are also hugely price sensitive, an increase of a few pence can have a massive change on purchasing patterns. Looking at one weekly special[1] I see Pepsi selling four 12-packs for $12. I would be shocked if customers taking advantage of that deal would balk at it being $13, for example. That would still be only $0.27 per can. [1] https://shop.shoprite.com/store/e65b663/weekly-specials/848 https://shop.shoprite.com/store/e65b663/weekly-specials/848
  - maccard 6y ago
    Apart from the fact that prices are obscene - the real meat is in what happens if there' a coke and a pepsi side by side, one is $12 for a pack but the other is $13 - which do they buy? The price difference is $0.02 per can, (which is potentially the difference a sugar tax might make), it would certainly be enough to sway a large number of people to choose the cheaper option. Not sure about the regularity of these deals, but I remember as a studen often going to a place with a €4 meal deal. One week we went along, and the price of the deal had been increased to €4.50, and even though their competitors had been selling at that price (or higher) for quite a while before that, the people who defaulted to there for lunch stopped going purely based on a tiny price increase.
technofiend 6y ago
>In other words, if we wanted a sugary drink tax to counteract the impact of corn subsidies in the US, [...] But that's not the point of a soda tax: it's to shape consumer behavior and cause them to prefer smaller portion sizes if they don't simply switch off sugary drinks altogether. That's why the taxes are 1-2 cents per ounce on sugary drinks. Philadelphia saw a 38% reduction in sales of sugary drinks after a 1.5 per ounce tax was added. [1] Beverage sales inside Philadelphia’s city limits dropped by 51% but were partially offset by an increase in sales just outside the city, resulting in a net decrease in soda sales of 38% in the area, researchers at the University of Pennsylvania found. [1] https://www.cnbc.com/2019/05/14/sugary-drink-sales-fall-38percent-after-philadelphia-levied-soda-tax-study.html https://www.cnbc.com/2019/05/14/sugary-drink-sales-fall-38pe...

by Lazare 6y ago

mc32 6y ago

For anecdotal support, let's walk over to Starbucks. The drinks aren't cheap and people pile on the sweet options. You even have the option of no sweetener (which few people take advantage of). I can see if, Sweetened drink = $8.00 Unsweetened = $4.00 And take away the sweetener packets. Yes, that would likely have an effect.

chucky_z 6y ago
IIRC, a 12oz coffee is ~$2. The equivalent 12oz coffee milkshake is ~$4. Guess which one is more popular? That said, I do actually buy the non-sugary drinks because they're cheaper. I tend to buy Blonde Americanos to get the lowest bitterness espresso flavor from them, at the lowest price.
deleted 6y ago
[deleted]

maccard 6y ago

> However, HFCS make up ~3.5% of the cost of a soft drink, and the cost of corn is less than half the total cost of making HFCS, which means the total impact of corn subsidies on the price of a soft drink is a couple of pennies. The actual cost of manufacturing a soft drink is in the order of pennies - [0] does a breakdown where the numbers are likely wrong but in the right ballpark. An increase of a few c per litre in tax at the production level would have a huge knock on effect on the price of the drinks, unless the manufacturers eat the increases. Customers are also hugely price sensitive, an increase of a few pence can have a massive change on purchasing patterns. [0] https://www.quora.com/How-much-does-it-cost-to-manufacture-355-ml-12-fl-ounces-of-Coca-Cola-Do-we-pay-much-more-than-that-What-accounts-for-the-difference-How-do-they-get-so-many-people-to-pay-so-much-more https://www.quora.com/How-much-does-it-cost-to-manufacture-3...

RobAtticus 6y ago
>Customers are also hugely price sensitive, an increase of a few pence can have a massive change on purchasing patterns. Looking at one weekly special[1] I see Pepsi selling four 12-packs for $12. I would be shocked if customers taking advantage of that deal would balk at it being $13, for example. That would still be only $0.27 per can. [1] https://shop.shoprite.com/store/e65b663/weekly-specials/848 https://shop.shoprite.com/store/e65b663/weekly-specials/848
- maccard 6y ago
  Apart from the fact that prices are obscene - the real meat is in what happens if there' a coke and a pepsi side by side, one is $12 for a pack but the other is $13 - which do they buy? The price difference is $0.02 per can, (which is potentially the difference a sugar tax might make), it would certainly be enough to sway a large number of people to choose the cheaper option. Not sure about the regularity of these deals, but I remember as a studen often going to a place with a €4 meal deal. One week we went along, and the price of the deal had been increased to €4.50, and even though their competitors had been selling at that price (or higher) for quite a while before that, the people who defaulted to there for lunch stopped going purely based on a tiny price increase.

technofiend 6y ago

>In other words, if we wanted a sugary drink tax to counteract the impact of corn subsidies in the US, [...] But that's not the point of a soda tax: it's to shape consumer behavior and cause them to prefer smaller portion sizes if they don't simply switch off sugary drinks altogether. That's why the taxes are 1-2 cents per ounce on sugary drinks. Philadelphia saw a 38% reduction in sales of sugary drinks after a 1.5 per ounce tax was added. [1] Beverage sales inside Philadelphia’s city limits dropped by 51% but were partially offset by an increase in sales just outside the city, resulting in a net decrease in soda sales of 38% in the area, researchers at the University of Pennsylvania found. [1] https://www.cnbc.com/2019/05/14/sugary-drink-sales-fall-38percent-after-philadelphia-levied-soda-tax-study.html https://www.cnbc.com/2019/05/14/sugary-drink-sales-fall-38pe...