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U.S. Warned of Sugar Shortage

by candice.tsuei | August 13, 2009 at 01:56 pm

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Do you have a sweet tooth for chocolate bars, cereals, cookies, gums, sodas, and juices? If so, you better watch out! Several giant foo producers warned the Obama government that the U.S. could be facing a severe sugar shortage unless the import quotas are increased.

"Experts forecast unprecedented shortages without prompt action," the manufacturers told Agriculture Secretary Tom Vilsack, citing a forecast from the government's own statistical literature which predicts that the US will end the next fiscal year with less than 13 days' worth of sugar on hand.

The firms, including Kraft Foods Inc., General Mills Inc., Hershey Co., and Mars Inc., indicated that the U.S. could "virtually run out of sugar" and they would be forced to increase consumer prices and lay off workers, unless the Agriculture Department allows more import of tariff-free sugar. Currently, the U.S. the amount of tariff-free sugar from major producers such as Brazil, with Mexico being the only exception.

While the threats from the firms seem credible, many economists aren't buying the argument.

Jack Roney, the Alliance's chief economist, said food companies probably wouldn't pass along any savings to consumers from a widened import quota. But each one-cent drop in the price of sugar costs U.S. farmers about $160 million, he said.

U.S. sugar prices has leapt by 80% this year and are trading at a record high price. The reason for that is simple - high demand, low supply. The world's largest sugar producer, Brazil, has experienced excessive rain this year, and the country is diverting a huge portion of its cane crop to making ethanol fuel. On top of that, another sugar-producer, India, has had a poor monsoon season. At the same time, U.S. sugar supplies are expected to drop 43% by September 2010 from this fall.

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D Bish (not verified)

at 11:30 on August 15th, 2009

Am I correct in my remembrance of High School Chemistry? It takes a lot of sugar to make methonal or ethonal. If so is the production of Methonal causing the shortage or at least adding to it? Looks like just another situation of changing our reliance from one hydocarbon to another without real consideration of the long term ramifications.