Nona Pelletier, Senior Business Reporter

The price of sweet treats is expected to rise as poor weather, labour disputes and ongoing supply chain issues drive prices higher amid a global shortage

"We haven't seen pricing at these levels since 2011," a New Zealand Sugar spokesperson said.

While global production was expected to fall short of expected consumption by 2.4 million tonnes in the current crop year, NZ Sugar said New Zealand's supply would not be affected, though prices were expected to remain high and volatile.

NZ Sugar is the country's largest refinery and marketed its retail products under the Chelsea Sugar brand.

The commodity price of sugar was trading at 12-year highs as 2023/24 global production dropped to an estimated 187.5 million tonnes from 189.4 million tonnes in 2022/23.

NZ Sugar said the price of raw sugar had increased 60 percent to US$0.28 a pound in the past 12 months from US$0.175 a year ago.

The World Health Organisation estimated New Zealanders consumed the equivalent of about 37 teaspoons of sugar a day in food and beverages, or a third of a pound.

Westpac agri-economist Nathan Penny said the rising cost of sugar would flow through to the cost of food and beverages and put pressure on overall cost inflation.

Domestic prices were already up 14 percent in October over September, adding about 40 cents to a 1.5kg package of sugar.

"In the latest October data we've seen that the price of a 1.5kg packet of sugar is up about a quarter over the past year and that's going to make some of our favourite Kiwi treats over summer and Christmas, like Pavlovas for example, much pricier than they were last Christmas," Penny said.

"We've seen some really hot food price inflation this year and in the middle of the year, it peaked at over 12 percent on an annual basis.

"It has since started to come off the boil. Annual food price inflation is running now at around 6 percent, but, as I've said, sugar prices are heading the other way in opposite direction."

The refinery said there had been production deficits in four out of the past five years, leaving major producers with minimal stocks.

NZ Sugar stored to 40 kilotonnes (kt) at its Chelsea Sugar Refinery, or about 10 weeks' supply.

Increased production in Brazil, Russia and China was not expected to be enough to offset heavy losses in production in India, Thailand and Mexico, where crops had suffered from drought and insufficient humidity.

Canadian sugar refineries were also low on supply as labour disputes left supermarket shelves empty across that country.

Australian sugar producers, which supply much of New Zealand's raw product, had reacted by raising prices as demand for its product increased.

In addition to weather, NZ Sugar said shipping pressure also added to the supply and cost issues.

"There is little capacity to add supply in the short term. This leaves the market exposed to weather and a heavy reliance on Brazil to meet the majority of export demand," it said, adding that bulk raw sugar shipments of about 28 kts arrive in New Zealand about every six weeks.

Shipping delays at the Panama Canal were adding to supply pressures.

Large grocery chain Woolworths New Zealand said it was aware of the rising cost of raw sugar, but there were no supply issues, yet.

Originally published by RNZ