One of the basic cornerstones of the American diet- sugar- stands in peril as the the biggest US food manufacturers warn of an almost certain sugar shortage headed right at us.
Kraft, Hershey and General Mills are among companies imploring the Obama administration to ease up on import restrictions under penalty of lost jobs and skyrocketing prices on cereal, snack foods, granola bars and a host of other foods. Current regulations limit imports from countries other than Mexico, but American food manufacturers insist that if they cannot import more tariff-free sugar, all these dire predictions will indeed come to pass.
Buried in the WSJ’s piece on the coming crisis is the real reason for soaring sugar prices globally- damn dirty hippies! Increased demand for ethanol fuel is cutting into sugar and corn crops worldwide and driving up prices, indirectly, for our donuts and Little Debbie snack cakes. A spokesman for the American Sugar Alliance points out that easing restrictions on imports won’t bring any savings to the American consumer and will likely hurt American farmers:
Phillip Hayes, a spokesman for the American Sugar Alliance, a trade group of cane and sugar-beet farmers, said farmers are “absolutely opposed” to expanding the sugar-import quota in part because it would cause the prices received by U.S. growers to sink.
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.
Full text of the letter to Agriculture Secretary Thomas Vilsack, below:
The organizations and companies below urge you to increase the sugar import quota immediately. Your experts forecast unprecedented shortages without prompt action.
According to USDA’s World Agricultural Supply and Demand Estimates, the United States will end the next fiscal year with less than 13 days’ worth of sugar on hand, unless imports are increased. If this forecast is accurate, our nation will virtually run out of sugar.
The shortage does not have to happen. The only reason markets are forecast to be so tight is the restrictive U.S. policy on sugar imports. Imports are subject to restrictive quotas.
But you have the authority to increase the sugar import quota, and we urge you to do so immediately, both for the current fiscal year – where high prices already indicate a painfully tight market – and for the upcoming year.
Without a quota increase, consumers will pay higher prices, food manufacturing jobs will be at risk and trading patterns will be distorted. Please act now in the interest of all Americans.