Expensive Sweets
The DMN reports that the price of domestic sugar is skyrocketing, thanks to hurricane damage.
On Aug. 19, before Hurricane Katrina pounded the sugar-rich gulf region, large users could buy refined beet and cane sugar for up to 28 cents a pound, according to Milling & Baking News. By Dec. 2, that price had climbed to 42 cents a pound--the largest midyear jump since at least 1982, according to Ron Sterk, assistant editor of the trade publication.
Some large buyers locked in the lower prices with long-term contracts earlier in the year. Others were forced to pay spot prices that peaked at 72 cents a pound....
The U.S. scarfs down about 10 million tons of sugar a year among retail, food service and manufacturing uses, according to Jack Roney, director of economics with the American Sugar Alliance in Arlington, Va.
Typically, more than 80 percent of that need — up to 8.5 million tons — is homegrown. Some 40 percent of that comes from Louisiana and Florida, with a smaller amount from Texas. All those states were hit hard by the 2005 hurricanes.
"There's no question that they hit the Louisiana farmers and the Florida farmers pretty hard," Mr. Roney said. "It knocked the cane over and inundated it with water."
He said farmers are still trying to "figure out how to save that crop."
In addition, one of the nation's largest refineries, Domino Foods' plant near New Orleans, sustained heavy damage from Katrina's floods. It is slated to reopen today.
Given the storms and a lower-than-expected yield from Midwest sugar beets, the U.S. Department of Agriculture estimates that sugar production this year will be down to 7.5 million tons. Imports will help pick up the slack.
Unfortunately, that's all DMN reporter Karen Robinson-Jacobs has to say about imports. Sugar is in fact one of the country's most subsidized and protected industries. Here's an earlier post on the topic, with links to previous ones. And here's an old-but-seasonal article by Cato's Dan Griswold on the cost of sugar quotas. Maybe there's a post-Katrina opportunity for a buyout in exchange for phasing out quotas and subsidies.