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.