Paying for that sweet tooth in the new year

Refined-sugar industry takes a whacking from Katrina, prompting forecasts of higher consumer prices

December 28, 2005|By KAREN ROBINSON-JACOBS | KAREN ROBINSON-JACOBS,KNIGHT RIDDER/TRIBUNE

Enjoy those remaining holiday sweets. The price is likely to rise in the new year.

Lay the blame largely on Hurricane Katrina, which bowled over much of the Gulf Coast's sugar-cane crop, shuttered a sugar-processing plant, sidelined producers' delivery trucks and raised the cost of fuel.

The result: Prices for refined sugar - used in everything from chocolate to ketchup - have risen 50 percent since mid-August.

Because many vendors set their holiday prices long before the hurricane season, they've had to eat the higher prices their sugar suppliers have charged.

But that benevolence can't last.

"The real problem is coming after the first of the year," said Stan Rothstein, president of Carrollton, Texas-based Redstone Foods, a wholesaler of imported and specialty candies. He set his prices for holiday treats back in April.

"I have a whole pile of price increases on my desk that take effect the first of the year."

So far, most food and candy makers have been taking it on the chin.

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. "There were enough that didn't lock in prices that it was pretty panicky for a while," he said.

Sterk said that, so far, grocers have avoided sticking consumers with the increased costs for bags of sugar. "It was mostly at the bulk and wholesale level," he said. But he, too, said consumers should get ready for increases in foods made with sugar.

"There was a blip at the end of the year that was eaten by a lot of manufacturers," Sterk said. "But the prices are still higher, and those will be more likely to be passed on. I think you're going to see them creep up as the new year goes on."

Karen Robinson-Jacobs writes for Knight Ridder/Tribune.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.