Food giants warn of sugar shortage without more imports

With sugar prices high and supplies low, major U.S. food processors are warning that the nation could "virtually run out of sugar" if the Obama administration doesn't ease import restrictions.

If not, they say, consumers will pay more for thousands of foods that rely heavily on sugar (chocolates, cereals, cookies, gums, sodas, juices) or that contain sugar as an additive (the list is endless). Jobs also would be lost, the companies contend.

That dire prediction came in a letter to Agriculture Secretary Tom Vilsack from Kraft Foods, General Mills, Hershey, Mars and other big producers. The wrote that without increased access to cheaper imported sugar, "consumers will pay higher prices, food manufacturing jobs will be at risk and trading patterns will be distorted."

Sugar industry officials counter that importing more sugar would not be cost-effective because there is now little difference between the world price and the price in the U.S. market. Freight costs would wipe out any savings, John Sheptor, the head of Imperial Sugar, the biggest U.S. producer, told Reuters.

Only Mexico is exempt from yearly import limits, which reduce potential supplies from major producers such as Brazil and India.

Muckety points out that import quotas have benefited the domestic sugar industry, especially the politically influential South Florida family that owns Domino Sugar and C&H Sugar.

Earlier in the week we noted that the price of sugar hit a 28-year high because drought in India and rain in Brazil — the top-two producers — have reduced crops. A contributing factor is the increasing amount of sugar being used to produce ethanol fuel. As a result, hedge funds and other speculators are betting the price will rise further. Their bets paid off yesterday: it jumped 4.4%.

The Atlantic and Reuters examine the price spike.

Some food for thought:

• Would consumers and workers genuinely benefit if quotas are relaxed? Would other jobs be lost?

• Would lifting quotas prevent price hikes? If the price of sugar drops, would food companies lower prices?

• Is the bigger issue the profitability of one major industry over another?

• Would less sugar in our treats and eats be a bad thing?

• Is using a key food crop to make fuel a wise decision?

source: blogs.usatoday