Trade body warns of sugar market disruption
Representing confectioners, bakers and other food manufacturers who use sugar, the trade association raised the alarm after the American Sugar Alliance said earlier this month that the market was sufficiently supplied.
SUA dismissed this claim from the representatives of sugar farmers calling it misleading and dangerous. The trade body said sugar supplies must be increased to avert the possibility of disruption, especially with hurricane season looming.
The sugar cane harvest area is down two per cent from a year ago to its lowest level since 1990, said SUA, adding that US Department of Agriculture crop reports indicate that this year’s sugar beat plantings were well behind and will result in a late harvest.
In addition, SUA said Mexican imports, which have recently provided some relief, are winding down with the end of the harvest. It said Mexican sugar companies are now saying that they need looser import restrictions to prevent shortages in coming months.
According to the SUA, additional evidence of the tightening sugar market is that US refineries will have to operate at near-record rates to supply adequate sugar for the remainder of the season.
If the market does end up being disrupted, it is the USDA that has to step in because, under the 2008 farm bill, it has to ensure adequate suppliers of sugar at reasonable prices.
Commenting on the situation, Fred Hensler, chairman of SUA, said: “With its rosy scenario, the American Sugar Alliance is setting up the U.S. Department of Agriculture to take the blame if anything goes wrong in the markets this summer and fall.”
American Sugar Alliance (ASA) was unable to comment on these accusations before deadline. However, the trade body has released its own statement in the past few days pointing the finger at food companies.
It says retail prices of refined sugar have increased over the past year while the wholesale sugar prices that manufacturers pay have dropped.
In its recently published annual Sugar Price Survey, ASA concludes from this that the only people to benefit from this pricing discrepancy have been grocers and candy companies who have seen their profit margins increase.
These claims are in direct contrast to those made by SUA which says that sugar prices are at near record highs. The trade company said the current wholesale price of US refined sugar is 35 cents per pound, which it claimed was ‘far above historic norms’.