Consumers may soon pay higher prices for white sugar

     Consumers may soon have to pay more for white sugar. increases in the world market price for the commodity, along with a more than EC$700,000 shortfall in revevnue have forced DEXIA to consider yet another price increase in less than six months

     If DEXIA gets its way consumers may soon have to pay higher prices for white sugar. Increases in the world market price for the commodity, along with a more than EC$700,000 shortfall in revenue resulting from declining rice sales, have forced the Agency to consider yet another price increase in less than six months.

     The world market price for white sugar has almost doubled within the last six months making it difficult for DEXIA to continue guarantying lower prices to the consumer. “About two year ago” noted Gregoire Thomas, General Manager of DEXIA, “we were purchasing sugar at US$365.00 per metric tonne. The price presently on the UK market from the very same dealers is now US$645.00. These prices do not allow us to be able to continue to offer that quality of sugar to the consumer at the very same prices.” Based on the figures and trends published by the International Sugar Organization it is very unlikely that prices are going to return to levels of US$365.00 and US$400.00 per metric tonne anytime soon. Since January fob prices per metric tonne of white sugar have been on the increase. Due to rising oil prices, sugar is now being converted to ethanol to run vehicles while at the same time sugar production has declined in Australia and Brazil-two of the world’s largest producers. Thus the heavy demand for sugar at this time is creating problems for consuming countries in terms of the prices at which they buy these commodities.

     The shortfall in revenue and increasing commodity costs has significantly affected DEXIA’s export development and trade promotion activities. DEXIA has been unable to pass on increases in price to the consumer in deference to its mandate to maintain stable and reasonable prices. This situation has resulted in serious cash flow problems for the Agency. In January, the government approved moderate increases on the price of sugar “but these increases,” says Thomas “have not been sufficient to help us cover our cost on those commodities.” At the current world market prices, the Agency will need an additional 10-15 cents per lb of white sugar just to cover the shortfall in its budget.

     As a stopgap measure, DEXIA has been sourcing white sugar out of Trinidad. While the price is a little better than that offered by the UK, consumers show greater preference for the heavily subsidized higher quality Tate & Lyle Sugar. DEXIA’s management have suggested however that “if persons are insisting that they want to consume the higher quality Tate & Lyle sugar then we may have to pass on the full cost of the sugar to the consumer.”