Tuesday an e-mail alert that came across this Examiner’s desktop noted that the big cyclone “down under” was threatening Australia’s sugar crop.
Many Americans may not realize Australia is the world’s eighth largest producer and third largest exporter of raw sugar.
So an obvious question is can’t other countries make up the difference? Under some circumstances, yes. But today’s markets are what is referred to as “tight.” Tight is market vernacular for world demand is already close to the world’s capacity to supply, at least in the short run.
Close enough so that sugar “futures” (the price of sugar promised for delivery at some future point for a fixed price) for March rose four percent, in one day, to over 35 cents a pound. That price is also the highest since around 1980. Back then it briefly topped 45 cents a pound.
The number of consumers of sugar include virtually every American and every other person around the world whose diets include processed foods. That number of consumers is in the billions.
Yes, some of the sugar contents of food that readers may see on labels is “natural” (i.e.; not added), but the vast majority of that sugar is added. That raw sugar that just got significantly more expensive to buy is what will be processed and added to our food supply starting this spring. Because sugar is in so many foods the price of processed foods generally is likely to have yet another reason to increase, and that may happen before spring.
As long as the price of sugar is likely to remain relatively high, there is incentive for growers of other crops to switch to sugar, but this takes time. The impact of the cyclone damage is exacerbated by the fact that the part of Australia’s sugar harvest that is already in is, due to generally unfavorable weather, only about 75 percent of last year’s. So the consequence is that raw sugar prices will continue rising possibly more than before.
Ohioans and all Americans should remember that commodities such as sugar are bought and sold on world markets by buyers and sellers located around the world. So this is not a domestic U.S. issue. It is another example of how intertwined our economy is with the world’s other economies.
One healthy though probably not popular alternative to all matter of sugar is to change our tastes slightly and start demanding our local stores carry products that have not just less sugar but are less sweet. Before too long time this would lower the demand for and hence price of not only sugar but also other sweeteners such as the various corn syrups.
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