Imperial Sugar Takes Advantage of Soaring Price

(MoneyWatch)  Imperial Sugar is taking full advantage of the rising price of sugar by plowing its considerable profits into long-term investments.

On Tuesday, the company announced that it had upped its stake in Wholesome Sweeteners to 50 percent. Wholesome, a joint-venture with the British firm Edward Billington & Son, plays to the extra-crunchy crowd, selling organic and "natural" sweeteners. Imperial said it has the option to decide by September 1 whether to buy out the remaining half. So look for that to happen.

Imperial paid $4 million for 5 percent of Wholesome, which puts a value of about $80 million on the venture.

Sugar prices have risen by about 30 percent since last fall.

In May, Imperial announced it was "exploring" a plan to build a big ethanol plant in Louisiana that would make the fuel from both sugar and corn. That is in part a long-term bet that, eventually, the U.S. will move more of its ethanol production away from corn and into sugar.

It's also a bet that the federal government will bestow on sugar producers some of the largess it now bestows on corn growers to make ethanol. Nearly all of the ethanol made in the United States is made from corn, while Brazil and other countries tend to make most of their ethanol from sugar cane. One problem in the United States is the government's price supports for domestic sugar, which makes sugar-based ethanol an expensive proposition.

For that reason, Imperial has been lobbying hard for government incentives for hybrid corn-sugar ethanol production.

And, in a move against domestic growers whose influence in Washington is powerful, it has lobbied for increased in the amount of sugar that can be imported for nonfood uses.

The company has not yet produces an estimate of what such a plant would cost.

In May, Imperial reported a loss in its second quarter of $15.5 million. But most of that loss was due to charges related to an explosion at a refinery in Georgia that killed 13 people and severely damaged facilities including silos and a packaging plant.