Consumers Benefit From Competitive Sugar Prices - Sweetener ...

Consumers Benefit From Sugar Price Declinesproducer price went down, the retail price went down, again with a lag. If one graphs pricesfrom 1970 to 1985, a similar pattern prevails.This direct linkage of the retail price to the producer price was always the most convincingargument that consumers are directly affected by changes in the sugar support price. Since thelate 1990s, however, the linkage seems to have been broken. The retail price has fluctuatednarrowly around roughly 42 cents per pound (or $2.10 for a 5-pound bag) despite significant upsand downs in the producer price. The two-dollar price point for a 5-pound bag may have aninfluence. Stores can put a brand on sale for $1.99 to attract shoppers, while keeping the normalprice above that level. But many analysts attribute the inflexibility to the increased market powerof retailers due to consolidation in the retailing sector.However, there has also been a great deal of concentration in the sugar processing industry itself,and it is not implausible that the industry could be partly responsible for the recent inflexibility ofretail sugar prices. It is possible that while the bulk industrial sugar market has remainedcompetitive, the marketing of sugar for retail sale has become less so. Quoted wholesale pricesfor refined sugar reflect what large bulk customers pay, not the wholesale price for consumerpackaged sugar paid by retailers or distributors. These prices are typically higher but are notreadily available. Whatever the cause, the spread between the two price series has jumped fromabout 10 cents/pound in the late 1980s to almost 20 cents/pound in 2004.9