Hurricane Katrina Squeezes Sugar Supplies
By Bernard Pacyniak
Amidst the death and destruction that Hurricane Katrina leveled on the Gulf Coast, now pegged at nearly 1,000 deaths with a million-plus residents displaced and a rebuilding tab of $150 billion, the natural disaster has also severely disrupted sugar supplies for candy manufacturers.
And while the sugar shortage pales in context when compared to Hurricane Katrina’s overall devas-tation, it placed many sugar-based confectioners in jeopardy, their buyers scrambling to ensure enough of the commodity for future production needs.
Both sugar refineries in Louisiana, Domino Sugar’s refinery in Chalmette, La., and Imperial Colonial, located in Gramercy, La., were hit by Hurricane Katrina, although Imperial was able to reopen after only six days. The two plants process Louisiana’s entire sugar cane crop. Although Imperial can handle some additional sugar cane processing, it will not be able to absorb all of the cane handled by the Domino Sugar refinery.
The aftereffects of Hurricane Katrina, coupled with earlier weather impacts on sugar beet and sugar cane crops elsewhere, aggravated an already tight sugar supply scenario that developed this summer. The result, a scarcity of domestic sugar and soaring sugar prices.
On August 12, the USDA, in an initial response to dwindling sugar supplies, increased the Overall Allotment Quantity (OAQ), a government marketing tool that limits the availability of existing sugar stocks to boost prices. It also slightly increased the Tariff Rate Quota (TRQ) on imported sugar.
The onset of Hurricane Katrina, however, further limited sugar stock availability, sending several confectionery manufacturers scrambling in early September for supplies to ensure candy production during October. On September 9, the USDA once again increased the OAQ and boosted the refined sugar import quota by 75,000 short tons.
“The NCA [National Confectioners Association] is continuing to monitor the situation and maintain contact with the USDA to let them know that the supplies remain extremely tight,” says Susan Smith, senior vice president – legal affairs.
According to Promar International, a strategic marketing and business consulting firm in Alexandria, Va., if the remaining sugar cane refineries “do not have access to enough raw sugar this fall, they will be unable to operate at full capacity. If that happens, we will be doomed to supply shortages again in the summer of 2006.”
Blueberry Hill Names Grosnick Broker of the Year
Private label general line candy supplier Blueberry Hill Foods recently presented its Broker of the Year Award to Charlotte, N.C.-based Grosnick Sales Group. Pictured, from left, are: Brad Ducorsky, president of Blueberry Hill Foods; Judy Grosnick; Elaine Grosnick; and Kelly White, marketing director of Blueberry Hill Foods. The company operates from corporate offices in Dallas and El Paso, Texas, as well as a production facility in Juarez, Mexico.