World sugar prices hit a 27-year high in August last year, when they had surged 80 percent since the beginning of the year. Meanwhile, sugar stocks have slumped, and some food manufacturers have expressed concern, saying that other commodity prices are also high at a time when recession-squeezed consumers are closely watching their food spend.
In September, the US Department of Agriculture (USDA) set sugar import quotas at the minimum allowed under World Trade Organization agreements, ignoring pleas from industry to increase sugar imports.
The Sugar Policy Alliance involves sweetener users including Hershey’s, Kraft Foods, Krispy Kreme and General Mills.
Its chairman Larry Graham said: “Sugar prices are now higher than they were in the aftermath of Hurricane Katrina, which closed two Gulf Coast sugar refineries and created major disruption in the industry. Yet USDA has not recognized the seriousness of the situation and has made no move to increase import quotas.”
World sugar prices have continued to rise, hitting 33.32 cents per pound in January 2010, according to USDA figures, compared to 15.67 cents per pound in January last year – and US retail prices are even higher, at 58 cents a pound in September.
However, the American Sugar Alliance (ASA), which represents the interests of US sugar growers, has consistently opposed food industry calls for increased imports.
ASA spokesperson Phillip Hayes told FoodNavigator-USA.com: “I never remember a time when the food manufacturers have said ‘we have enough sugar on the market.’…But I’m surprised they are focusing in on sugar price. The USDA has long said that it doesn’t matter what the price is. The market’s going to take care of the price.
“…It doesn’t seem like a winnable argument for me, when you can go into a store and buy a pound of sugar for 60 cents.”
US sugar policy was set with the 1981 Farm Bill and works on the principle that supply should not exceed demand. In order to achieve this, the government can restrict the amount of sugar that American sugar farmers can sell, restrict the amount that the US will buy to the level required by trade obligations, and divert excess sugar to ethanol production. The idea is that sugar prices should remain stable, but this has not been the case.
Mexican sugar is the only sugar which is not subject to import restrictions in the US, as it is protected by the North American Free Trade Agreement.