THE U.S. SUGAR POLICY:HOW SWEET IT IS (OR ISN'T) - Term Paper Example

In addition, the sugar policy beneficial to government as well as the U.S. economy as more jobs are created, revenue is raised and billions of dollars are added to government coffer. However, the consumer pays for these benefits since he/she has to pay more than the world price of sugar. Introduction Globalization is the integration of regional as well as national economies, societies and cultures into the international scene through a global network of ideas facilitated by communication, transportation and trade.

Globalization, a phenomenon that has several aspects that acts on world events in various ways, began towards the end of the nineteenth century, slowed down after the First World War and then picked up during the fourth quarters of the twentieth century. These aspects include economic, labor, financial, political, cultural, social, industrial, information, language, religious, ethics and technology. Globalization has growing impact on world events especially in the economic arena; indeed, it has permanently changed business practices and organizations.

Within the economic arena, globalization has led to a shrinkage, if not, a removal of barriers between national boundaries, thereby facilitating flow of goods, capital, services, labor and of course entrepreneurs. Economic globalization affects production and consumption of goods and services either for better or for worse. Indeed, this is the case of sugar production and consumption across the global. For instance, the higher production cost and ever increasing production of sugar-derived ethanol in Brazil and policy-induced production swings in Asian countries as well as inelastic demand have set the stage for higher prices of sugar in the international market.

Indeed, the price of sugar reached their highest levels in twenty nine year – 30 cents/Ib in February 2010, falling back to half that price in summer of the same year. This, indeed, reflect how globalization impact international events as policies, economic conditions and production trends in the major producing countries reverberate throughout the globe. Although, fluctuations in world sugar prices affect U.S. domestic sugar price especially when prices are high, the U.S. sugar policy has insulated the U.S. sugar price from world sugar price movements.

The insulation notwithstanding, developments with the U.S. sugar market still affect the global market. The World Sugar Market: an Overview In response to lower acreage, weather disruptions, and policy developments, the world sugar production fell by nearly 20 million tons (12 percent) in 2008/2009 marketing year; however, for 2010/2011 marketing year, world sugar production is forecast at 164 million tons, up 12 million tons from the revised 2009/2010 estimate (United States Department of Agriculture, 2010).

This forecast change is based on higher production in Brazil, the world leading sugar producer and exporter. While production fell in 2008/2009, sugar consumption increased, creating a market pressure that resulted in a two-fold increase in global price of sugar. In fact, global consumption of sugar continues to increase as consumption for 2010/2011 is pegged at 158 million tons, up 4 million from 2009/2010 (United States Department of Agriculture, 2010). Exports are also expected to increase in 2010/2011 marketing year as forecast figures are projected at 54 million tons, up by 3 million from previous marketing year (United States De