Ache in the Sweet Tooth

Few of the pains of inflation have so infuriated consumers as the ache in their sweet tooth caused by the astounding rise in sugar prices. Since January, the store price of a 5-lb. bag of sugar has rocketed from 900 to $3.45; wholesale sugar prices have been raised seven times in the past six weeks. Consumers have tried to strike back by organizing sporadic regional boycotts, and last week Carol Tucker Foreman, executive director of the Consumer Federation of America, which claims 30 million members, announced plans for a nationwide boycott from Dec. 1 to 10. Even some grocery chains are urging shoppers to buy substitutes rather than sugar.

The boycotts have had little effect so far, though, because only about one-fourth of all sugar used in the U.S. is sold directly to consumers. The rest is bought by industries that produce a wide range of edibles: candy, bread, soft drinks, cereals and canned vegetables.

The sugar-price explosion has driven up the price of these goods too, but, even so, some industrial users are hurting.

The Associated Retail Bakers of America claims that many small bakeries face financial ruin unless they can get an emergency federal subsidy to help them pay the inflated cost of sugar.

The rise has prompted a flurry of federal investigation. Last week, as its first official act of consequence, the Government's 3 1/2-month-old Council on Wage and Price Stability held two days of hearings about sugar prices. The council, which has no authority to order price rollbacks, carefully refrained from fixing blame. But it did present a study made by its staff that concluded that all sections of the sugar industry --cane and beet growers and refiners --have made "very large windfall gains." For example, Amstar Corp., the nation's largest sugar refiner, has recorded a 221% rise in profits so far this year, and Great Western United Corp., the biggest U.S. beet-sugar processor, has raised its profits by a spectacular 1,120% over 1973 levels. Before the hearings, Council Director Albert Rees said that "the price of sugar is about 2 1/2 times the sustainable price."

A federal grand jury in San Fran cisco is about to complete a 14-month investigation of sugar-pricing practices and is widely expected to return indict ments against several sugar companies soon. The Justice Department has an nounced that it is conducting a separate investigation of possible sugar price fixing.

False Rumors. Refiners insist that much of the price rise has been forced by the soaring cost of raw sugar, especially cane, and that their bulging prof its are largely one-shot gains resulting from the sale of inventories that have risen in value enormously. Indeed, the basic causes of the price runaway go deeper than any possible profiteering.

Since 1971, world sugar production has fallen behind surging demand, forcing many countries to draw from reserve stocks, which are now seriously depleted. The shortages have been aggravated by chill autumn rains that ruined much of this year's sugar-beet crop in West ern Europe and the Soviet Union; Western Europe, once a major exporter of sugar, will certainly become a major importer. All that has brought huge gains to sugar-cane growers in Brazil, Cuba, the Philippines, Hawaii and Argentina, but grief to consumers in the mainland U.S., which imports about half of the 11.5 million tons of sugar it uses each year. Wild speculation on commodity exchanges has driven up sugar prices further. Some of the speculation has been fueled by false rumors that oil-rich Arabs have been buying up and hoarding enormous quantities of sugar.

Though all U.S. sugar refiners have enjoyed big profit gains, the increases have been much greater for beet than for cane processors. The cane refiners have to buy their raw material on the world market at inflated prices. The beet processors negotiate much more profitable supply contracts with farmers in the Western states by agreeing to split the earnings on sales of refined sugar. Beets are much easier and less costly to process than cane, but beet sugar sells for almost as much as cane sugar, with which it is largely interchangeable. Harry Clayton, a management consultant to beet-processing Great Western, candidly admits that that company's 1,120% profit rise has indeed been a windfall. Says he: "In commodity fields, you need a windfall from time to time because you have a lot of lean years."

Some consumers in the Southwest are driving into Mexico to load up on sugar at a government-set ceiling price of 80 per Ib. For the rest of the nation, there is no significant price relief in sight.

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