Roger’s Sugar (RSI.UN-Toronto) is basically the only company in Canada that sells sugar. Thanks to the Canadian Government placing tariffs on imported sugar, no foreign companies can sell sugar in Canada and be competitive. Even though there are more and more people who are placing an emphasis on healthier eating, the sugar market in Canada is pretty steady.

I bought the company about 5 years ago, for a hair under $4. The company trades at the $4.80 level today. When I bought Roger’s, they paid a monthly distribution at a little over 3 cents a share. (if my memory serves me right, it was 40 cents a year) Today, the distribution is over 48 cents per year. A 20% growth in distributions over 5 years is hardly worth getting excited over, but then again, it’s the sugar business. I didn’t expect a huge increase. All in all, I’m pretty satisfied with the investment.

So why am I thinking of selling? First of all, sugar prices just hit a 29 year high. At first glance, it doesn’t seem like a big deal. Roger’s is basically the middleman. They acquire the sugar, refine it, and then sell it. Being the only game in town, they can just pass the increased costs to customers. It’s a pretty attractive spot to be in for the company. But food companies respond by jacking up their prices, perhaps reducing demand for their sweet goods.

Another thing that concerns me is the 600 pound gorilla of the sugar business, High Fructose Corn Syrup. Many companies have moved away from sugar in their products, in favor of HFCS. While the health consequences on HFCS will be debated for a long time to come, it still poses a risk to the sugar business.

Then there’s the whole income trust conversion thing coming up in 2011. It looks like the company isn’t going to convert, making any distribution fully taxable. Suddenly my 12% yield on cost becomes a lot less attractive.

With all these negative things surrounding the company, will I sell? I don’t know, but I’m definitely thinking seriously about it. I’ll let you guys know either way.

Tell everyone, yo!