The Upside of No Sugar

Aug.13.09 | About: iPath Dow (SGG)

With sugar spiking to all-time highs, there is a potential behavioral upside. Much as happened with higher oil prices, which changed driving behavior, higher sugar prices could materially change people’s behavior, steering them away from sweets and refined sugar products, which wouldn’t be such a bad thing.

Here is the WSJ:peak-sugar

In a letter to Agriculture Secretary Thomas Vilsack, the big brands -- including Kraft Foods Inc., General Mills Inc., Hershey Co. and Mars Inc. -- bluntly raised the prospect of a severe shortage of sugar used in chocolate bars, breakfast cereal, cookies, chewing gum and thousands of other products.

The companies threatened to jack up consumer prices and lay off workers if the Agriculture Department doesn't allow them to import more tariff-free sugar. Current import quotas limit the amount of tariff-free sugar the food companies can import in a given year, except from Mexico, suppressing supplies from major producers such as Brazil.

…the food companies warn in their letter to Mr. Vilsack that, without freer access to cheaper imported sugar, "consumers will pay higher prices, food manufacturing jobs will be at risk and trading patterns will be distorted."

Doesn’t sound so bad, you know. More here.