By: Luzi Ann Javier and Marvin G. Perez
Spangler Candy Co. saw last month just how tight and costly U.S. sugar supplies are. For the first time in at least 38 years, the company couldn’t get the sweetener it needed to make Dum Dum Pops and candy canes.
When a power failure halted shipments from Spangler’s main supplier, Chief Executive Officer Kirk Vashaw scrambled to find alternatives. He came up 25 percent short, forcing a cut in candy output at the Bryan, Ohio-based company his family has run for four generations. Sugar is 70 percent of his ingredient costs. While the disruption lasted a day, Vashaw says inventory is getting tighter than when prices surged to a record in 2010.
U.S. food companies can’t get enough sugar even as the world heads for a fifth straight year of surpluses. Imports are restricted by tariffs first imposed two centuries ago to protect cane farmers, and a trade dispute is slowing deliveries from Mexico, the top foreign supplier. The gap between U.S. and world prices reached the widest in two years, adding to costs for buyers including Hershey (HSY) Co. that already are charging more for candy to cover increases in cocoa and dairy products.
“There’s not a lot of sugar to sell right now,” said Frank Jenkins, the president of South Norwalk, Connecticut-based JSG Commodities, the largest U.S. sugar broker. “We’re going to need to increase imports, otherwise we’re going to run out of sugar or prices will continue to rise.”
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