High Prices for Snickers? Feds Shouldn’t Point Fingers

Recently I blogged about the federal government investigating businesses for keeping the price of milk too high, even though the government’s own policies push up milk prices.

Government policies also seem to work at cross purposes with respect to chocolate. The Wall Street Journal reports that the price of a Snickers bar is up 6 percent over last year as a result of rising cocoa prices, and the government is looking for culprits. ”Chocolate makers are accused of colluding as far back as 2002. The U.S. Justice Department has inquired into their pricing practices….” For their part, chocolate makers are blaming high prices on speculation by hedge funds.

I don’t know why cocoa prices are high, but the other big input to chocolate is sugar. And we know that government sugar controls keep U.S. sugar prices about twice as high as world prices, which hurts consumers and has led to an exodus of sugar-using food manufacturers to Canada and Mexico.

In a report on the sugar industry in 2006, the Department of Commerce found that sugar represents 18 percent of the input costs of chocolate products, which indicates that the government’s high-price policy for sugar is taking a substantial bite out of the budgets of America’s chocoholics.