Sounds to me like there’s more to this story than simple shortages of sugar.
In a letter to Agriculture Secretary Thomas Vilsack, the big brands — including Kraft Foods Inc., General Mills Inc., Hershey Co. and Mars Inc. — bluntly raised the prospect of a severe shortage of sugar used in chocolate bars, breakfast cereal, cookies, chewing gum and thousands of other products.
The companies threatened to jack up consumer prices and lay off workers if the Agriculture Department doesn’t allow them to import more tariff-free sugar. Current import quotas limit the amount of tariff-free sugar the food companies can import in a given year, except from Mexico, suppressing supplies from major producers such as Brazil.
While agricultural economists scoff at the notion of an America bereft of sugar, the food companies warn in their letter to Mr. Vilsack that, without freer access to cheaper imported sugar, “consumers will pay higher prices, food manufacturing jobs will be at risk and trading patterns will be distorted.”
Officials of many food companies — several of which are enjoying rising profits this year despite the recession — declined to comment on how much they might raise prices if they don’t get their way in Washington.
The world’s biggest sugarcane producer, Brazil, is of course diverting much of its crop to make ethanol instead of sugar. But is it really such a horrible thing if sugar become expensive? Maybe food manufacturers will stop using so much of it in every damn thing they make? Ha.
U.S. sugar producers doubt whether any price savings would be passed along to consumers in any case: historically, just has helped the profits of food manufacturers:
Jack Roney, the alliance’s1 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.
“We take offense at any notion of reducing producer prices for sugar having any benefit for consumers, because historically we’ve never seen any pass-through of lower commodity prices of ingredients,” he said. “It really is a profit-increasing opportunity for user companies.”