Sugar Shortage Possible for Store Brands

WASHINGTON A potential ban on planting genetically modified (GM) sugar beet seeds in 2011 could equate to a 20% drop in U.S. sugar production, and a huge headache for retailers looking to source bagged sugar for their private labels. Approved for use by the U.S. Department of Agriculture in 2005, GM sugar beet seeds now produce 95% of sugar beets grown in the U.S. But a judge's dismissal in August

WASHINGTON — A potential ban on planting genetically modified (GM) sugar beet seeds in 2011 could equate to a 20% drop in U.S. sugar production, and a huge headache for retailers looking to source bagged sugar for their private labels.

Approved for use by the U.S. Department of Agriculture in 2005, GM sugar beet seeds now produce 95% of sugar beets grown in the U.S. But a judge's dismissal in August of the USDA's initial approval due to a lack of research on the seeds' environmental effects threatens to cut 1.6 million tons from next year's sugar beet crop, according to reports.

“If beet is reduced, retail gets pinched big time — especially the private-label retail,” said Bill McDaniel, chief executive officer of U.S. Sugar, a store-brand supplier of bagged sugar to major retailers. The effects would be significant since most retailers rely on beet sugar rather than cane, and many haven't secured limited supplies while locking in current prices with a contract, added McDaniel.

“There [could be] shelves with just Domino sugar and nothing else,” he said.

At a time when sugar is nearing decades-high prices, the move of several major manufacturers from high-fructose corn syrup to sugar sweeteners is taxing an already-strained supply. But the effects on CPG manufacturers sourcing the ingredient won't be as severe since many have already secured contracts for next year.

“Those bookings are long put to bed,” noted McDaniel.