This paper "Sugar Industry" discusses the cost and benefits of the prevailing system, and whether any changes are required for betterment, if so, the funding of such changes, and the prospective winners and losers from such changes to be made…
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The U.S. sugar industry saved the domestic players from the changing world prices of sugars. For importing sugar, the U.S. has to pay an import price which also includes import duties. However, it has been found that there occurs a significant gap between the import prices and the market prices. The reasons of the volatility of the market prices could be the unbalanced supply which may result from high costs of production, implying that small changes in the supply may have significant price effects. (Agricultural trade policies in the new millennium) (Kennedy & Koo 156) The U.S. followed a sugar system which was meant to protect the domestic sugar producers from the volatile and high global market prices. This system led to almost double prices for sugar than the market prices. However, in the year 1989, the traditional quotas were changed and a new tariff quota was being followed which led to paying an extra duty, thereby allowing imports to respond to greater demands. From the 1990s, there was demand for change in policies, when the World Trade Organization, came into being (Vaughan, & France 25-29).The sugar program in the U.S. helps the domestic producers through a loan program which guarantees the producers a minimum market price for the sugar they produce. However, this has to operate without any cost to the government. In order to prevent losses, the USDA (U.S. Department of Agriculture) has to keep the prices up, and the import quota plays a crucial role in this. The tariff rate quota allows a lower level of imports at a low tariff level, that is, restrictions are made to the foreign supply of sugars. (The U.S. Sugar Program, 18-19).
As per researches, the U.S. sugar program increases costs to the U.S. sweetener users. The government, not paying directly to the producers, lists the costs to the users of sweeteners. As a result there is a gap between the import prices and the prevailing market prices. Thus the users pay more which benefits the producers. Keeping the prices high, protection is obtained against forfeiture or loss in terms of loans or other factors, and helps the producers to recover loan rates, and other costs like transportation. (The U.S. Sugar Program, 24-25). Manufacturers who produce substitutes for sugar also benefit from the sugar program. However, the benefits from the sugar program are not always profits. Profits are dependent on production and efficiency of the producer. (The U.S. Sugar Program, 33-35).
Consumers and taxpayers enjoy several benefits from the U.S. sugar program. The American economy benefits from the policies by
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