You may have noticed lately that your morning coffee tastes slightly more bitter than usual. It may have something to do with a 15 million-ton sugar shortage in the face of global demand. In Europe, thats meant a steep price increase from 550 euros per ton in August 2010, to 900 euros per ton this year.
The most common reason cited for the current supply shortage are weather problems in Mexico, Australia and, most importantly, in Brazil, the worlds top producer. Also mentioned as contributing factors are the use of sugar cane for biofuels and increased demand in emerging countries. The situation is so bad right now that the International Sugar Organization announced that even with a good 2011/2012 harvest, sugar stocks will not return to levels considered healthy.
There is one other major factor affecting worlds sugar supply: the surprising end of the long romance between American consumers and high-fructose corn syrup, or HFCS, a sweetener often used in the food industry to replace cane or beet sugar. Growing evidence has linked HFCS to obesity and diabetes. For health reasons, in other words, food producers in the United States are beginning to wean themselves off the corn-based sweetener.
Growing concern among consumers about high-fructose corn syrup, which is made from government-subsidized corn, is forcing producers, especially soft drink makers, to go back to cane and beet sugar, says Euromonitor, a market research firm. This tendency away from HFCS is another factor pushing up prices.
The United States is not self-sufficient when it comes to cane sugar. Further complicating matters was the recent disastrous harvest in Mexico, which left U.S. producers without their principal provider. Theoretically, the situation could benefit Nicaragua and Guatemala. The problem there, however, is that unlike Mexico, these countries arent part of the North American Free Trade Agreement (NAFTA), meaning their exports are subject to quotas and tariffs.
That could change. Euromonitor reports that the U.S. Department of Agriculture said in August that it is considering relaxing import barriers in an effort to close the supply gap.
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