Big Food Battles Big Sugar to Cut Import Prices

Food firms warn of shortages if cheap foreign sugar blocked
By Rob Quinn,  Newser Staff
Posted Aug 13, 2009 1:21 AM CDT
A man walks with his bicycle through sugar cane fields in Piracicaba, Brazil, with ethanol-filled tanks in the background. Use of sugar for ethanol has helped drive world sugar prices up sharply.   (AP Photo/Victor R. Caivano)
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(Newser) – America could "virtually run out of sugar" if more cheap foreign imports aren't allowed in, some of the nation's biggest food companies warned Agriculture Secretary Thomas Vilsack in a recent letter. The firms—which pay around twice the world market price for sugar because of tariffs to protect sugar-beet farmers in the Midwest and sugar-cane farmers in the South—say they'll have to hike prices and lay off workers unless they're allowed to import more tariff-free sugar from places like Brazil, the Wall Street Journal reports.

The price of sugar is soaring in part because producers worldwide are diverting huge amounts to make ethanol—including half of Brazil's crop. The sugar industry, meanwhile, says increasing the flow of tariff-free  sugar would ruin farmers without helping consumers. "Historically we've never seen any pass-through of lower commodity prices of ingredients," said a lawyer for a sugar industry group. "It really is a profit-increasing opportunity for user companies." (Read more sugar stories.)