The Sugar Beat
Food Manufacturers Gobbling Up Profits this Thanksgiving
|
Farmers were blamed for the increased cost last year, as most commodities (sugar being an exception) saw large price spikes. But more expensive pumpkin pies, mashed potatoes, and turkeys are hard to explain this time around. The cost of corn, wheat, and other staples has been sliced in half in recent months. Ditto for fuel, which also took some blame for higher grocery bills. Jack Roney, an economist with the American Sugar Alliance, says the explanation is simple. “As crop prices rise, food manufacturers are quick to pass along the extra cost to grocery shoppers. But when crop prices inevitably come tumbling back down, the food manufacturers keep prices high to pad their profits.” Roney has been following this phenomenon, known as “sticky prices,” for more than two decades, including his time as an economist with the U.S. Department of Agriculture (USDA). He says no commodity deals with sticky prices more than sugar. “Sugar farmers have been targeted by food companies for as long as I can remember. The manufacturers blame food price hikes on sugar, even when sugar prices are going down,” he said. According to the USDA, manufacturers and grocery stores pay less for sugar today than they did in 1980. Yet, as any grocery shopper knows, the cost of cookies, cakes, candy and other sweets is far more expensive today than in 1980. Roney contends that this past year has been particularly painful for sugar growers. “We’ve seen the same run-up in our input costs as other commodities, but unlike other crops, our price didn’t climb to help us offset the higher cost of doing business. To add insult to injury, our price is now dropping like a rock.” Wholesale sugar prices have fallen by more than 12 percent since September, a price drop that is largely attributable to an August decision by the USDA to import more sugar. However, Roney says the food manufacturers still aren’t happy. “They are lobbying the USDA to ignore the Farm Bill and bring in even more unneeded foreign sugar to send our prices even lower,” he explained. “In other words, we’re paying more to produce our crop, getting less for what we produce, and getting charged more to buy it back at the grocery store. On top of it all, we are still coming under attack by large companies who are hungry for even bigger profits.” Some lawmakers have taken notice of the food manufacturers’ actions and are starting to push back. Just last month, Sen. Charles Grassley (R-IA) demanded that companies either lower food prices or apologize to America’s farmers for being scapegoated. House Agriculture Committee Chairman Collin Peterson (D-MN), a staunch supporter of sugar producers, agrees. He recently told a group of Minnesota farmers that if the food conglomerates don’t change their ways, “There’ll be hell to pay.” |
Expect to pay more for the classic Thanksgiving dinner this year—six percent more, according to a study recently released by the American Farm Bureau Federation.Audio & Video
Jack Roney on Fox Business
Factors Driving the Sugar Market: Jack Roney of the American Sugar Alliance on the commodity's banner year last year and where prices are headed.
American Crystal Sugar Company
American Crystal Sugar Company is a world-class agricultural cooperative specializing in the production of sugar and related agri-products.
RGVSG Chairman Dale Murden on the upcoming Farm Bill
Members of the House Agriculture Committee are traveling the country to hear from producers about the upcoming Farm Bill. Rio Grande Valley Sugar Growers Chairman and cane grower Dale Murden discusses the sugar provisions he hopes will be included in the 2012 Farm Bill.