(Chuck Muth) – David Fickling, a commodities reporter for Bloomberg, penned an interesting prediction in the first paragraph of a recent column…
“Now might be a good time to take note of how much your snack-time chocolate bar weighs. If sugar prices keep heading the way they’ve been going this year, it could be getting smaller.”
What’s interesting is that critics of the U.S. sugar program continually claim the supposed high cost of domestic sugar, as opposed to the comparatively lower cost (for now) of subsidized foreign sugar, has resulted in higher consumer prices for candy bars and such.
What those same critics constantly hide, however, is the fact that the cost of a pound of domestic sugar today is about the same as it was 30 years ago, without even adjusting for inflation.
So if the cost of a chocolate bar is now 5 or 6 times what it was three decades ago, it’s due to factors other than the cost of home-grown sugar. Those factors include the higher cost for labor, rent/real estate, government regulations, taxes, legal compliance…and, of course, profit-taking.
But as Fickling notes, candy companies and other sweets manufacturers haven’t merely raised prices over the years, they’ve also shrunk product size. So not only are you paying more for that chocolate bar, you’re getting less of it.
Yet we’re supposed to believe it’s the American sugar farmer who’s the bad guy?
In any event, the “good times” of artificially cheap, subsidized foreign sugar may be coming to an end soon as global sugar prices appear heading back up to the true-market price where U.S. sugar already is.
Fickling reports that global raw sugar prices “rose to the highest in almost two years last week,” thanks in part to heavy rains in Brazil, the world’s #1 exporter of sugar, which have “hurt cane crushing.”
Meanwhile, a serious two-year drought in India, the world’s #2 sugar producer, has resulted in that nation surprisingly becoming a net sugar importer this growing season.
And both Thailand and the European Union are experiencing a tightening in production, as well.
As an overall result, the global glut of excess foreign sugar that’s been distorting market prices in recent years has dropped to its lowest level since 2011. Which means despite continued government meddling in the sugar industries of those nations, the cost of global sugar is likely about to go up.
Which means your candy bar could well shrink in size again. Enjoy it while you can.