Domestic food companies are closely watching the rise in international sugar prices. There are concerns that if companies that refine raw sugar into sugar and sell it raise product prices, there could be a domino increase in the overall food industry in Korea.
The price of processed foods such as bread and ice cream could soar, and the price of eating out, which uses a lot of sugar, is highly likely to skyrocket. The food industry predicted that even if not right now, at the end of this year, the aftermath of rising prices due to sugar could occur.
According to industry sources on the 23rd, the July sugar price traded on the US International Futures Exchange (ICE) rose 3.73% from the previous day to 24.74 cents per pound on the 20th (local time). This is the highest since July 2011.
Brazil, which produces raw sugar, which is a raw material for sugar, saw a sharp drop in production due to weather conditions, and India, the second largest exporter, regulated raw sugar exports and sharply reduced supply, causing futures prices to soar.
In the case of companies that import raw sugar, turn it into sugar, and sell it, they are in the position that there is no problem right now. This is because the stock was secured when the international sugar price was trading at a low price, such as the lowest point at 19.67 cents per pound earlier this year.
The problem is if sugar prices have been on a sharp rise for more than six months. Companies observe sugar price trends and buy large amounts during price declines to implement stable supply and price policies, but in the long term, they have no choice but to raise sugar.
There are also concerns that sugarflation may flare up in the food industry if sugar sales companies such as Daehan Jedang, Samyang Corporation, and CJ CheilJedang raise the prices of B2B sugar products starting at the end of this year.
Processed foods such as bread, ice cream, snacks, and beverages may be affected first. It is true that various sweeteners are used instead of sugar these days, but sugar is still used a lot in processed foods, which can increase product production costs.
Food service prices are also expected to be affected by rising sugar prices. Since sugar is used as a basic ingredient for various types of food, including Korean food, an increase in the selling price of sugar is highly likely to lead to an increase in food prices.
An industry insider said, “Last year, prices of snacks, ice cream, carbonated drinks, coffee mixes, etc. soared due to increases in raw material prices, energy, logistics costs, and labor costs, including sugar.” The domino effect may appear again in the first half.”
Another official said, “Even now, the cost of producing products has increased significantly, but there are companies that are unable to raise prices to participate in price stabilization.”
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.