Kraft Foods has repeated its call for the US government to review quotas on sugar imports amid fears of an “unprecedented shortage” of sugar in the next year.
The Milka chocolate maker, which last week joined the likes of General Mills and Hershey in warning that the food industry faces a lack of sugar, told just-food that the US Department of Agriculture had a forecast a slump in supply.
“USDA experts forecast unprecedented shortages of sugar in the next fiscal year,” a Kraft spokesperson said. “So many of us in the food industry are again urging our government officials to review the sugar import quota in light of these forecasts.”
According to agribusiness analysts Rabobank, international sugar prices have more than doubled in the last year as adverse weather conditions affect supplies in India and Brazil – the world’s two largest sugar producers.
Last week, the American Sugar Association dismissed the food companies’ concerns as “political shenanigans”.
Kraft declined to provide a forecast for its sugar bill this year but said that, as a whole, its commodity costs would rise on 2008.
“In 2008, commodity prices progressively increased during the year, peaking in Q4. They have fallen off from peak levels, but we still expect a year-on-year increase in average costs of about 2% versus 2008,” the spokesperson said.
The spokesperson added that Kraft’s hedging policy could help protect the business against volatility in prices, although she declined to comment directly on whether a jump in sugar costs would mean price increases for consumers.
“We continue to improve our brand equity through investments in quality, innovation and marketing, and are confident in our ability to cover costs through pricing and productivity -whether costs are up or down,” she said.
Luke Chandler, director of agri commodity markets research at Rabobank International, told just-food yesterday food companies are likely to try and recoup higher sugar costs by hiking consumer prices.