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Multilateral Trade and Agricultural Policy Reforms in Sugar Markets

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We analyze the impact of trade liberalization, removal of production subsidies, and elimination of consumption distortions in world sugar markets using a partial-equilibrium international sugar model calibrated on 2002 market data and current policies. The removal of trade distortions alone induces a 27% price increase while the removal of all trade and production distortions induces a 48% increase by 2011/12 relative to the baseline. Aggregate trade expands moderately, but location of production and trade patterns change substantially. Protectionist OECD countries (the EU, Japan, the US) experience an import expansion or export reduction and significant contraction in production in unfettered markets. Competitive producers in both OECD countries (Australia) and non-OECD countries (Brazil, Cuba), and even some protected producers (Indonesia, Turkey), expand production when all distortions are removed. Consumption distortions have marginal impacts on world markets and location of production. We discuss the significance of these results in the context of mounting pressures to increase market access in highly protected OECD countries and the impact on non-OECD countries.

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Paper provided by Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University in its series Food and Agricultural Policy Research Institute (FAPRI) Publications with number 04-wp356.

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Date of creation: Sep 2005
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Handle: RePEc:ias:fpaper:04-wp356

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Keywords: agricultural policy; Doha; domestic subsidies; sugar; trade liberalization; WTO.;

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References

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  1. Mitchell, Donald, 2004. "Sugar policies opportunity for change," Policy Research Working Paper Series 3222, The World Bank.
  2. M. Ataman Aksoy & John C. Beghin, 2005. "Global Agricultural Trade and Developing Countries," World Bank Publications, The World Bank, number 7464.
  3. Babcock, Bruce A. & Beghin, John C. & Fuller, Frank H. & Mohanty, Samarendu & Fabiosa, Jacinto F. & Kaus, Phillip J. & Fang, Cheng & Hart, Chad E. & Matthey, Holger & de Cara, Stephane & Kovarik, Kare, 2001. "FAPRI 2001 U.S. and World Agricultural Outlook," Staff Reports 32052, Food and Agricultural Policy Research Institute (FAPRI).
  4. John C. Beghin & Barbara El Osta & Jay R. Cherlow & Samarendu Mohanty, 2003. "The Cost Of The U.S. Sugar Program Revisited," Contemporary Economic Policy, Western Economic Association International, vol. 21(1), pages 106-116, 01.
  5. S¯ren E. Frandsen & Hans G. Jensen & Wusheng Yu & Aage Walter-J¯rgensen, 2003. "Reform of EU sugar policy: price cuts versus quota reductions," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(1), pages 1-26, March.
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Cited by:
  1. David Abler & John C. Beghin & David Blandford & Amani Elobeid, 2006. "U.S. Sugar Policy Options and Their Consequences under NAFTA and Doha," Center for Agricultural and Rural Development (CARD) Publications 06-wp424, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Beghin, John C. & Elobeid, Amani, 2013. "The Impact of the U.S. Sugar Program Redux," Staff General Research Papers 36172, Iowa State University, Department of Economics.
  3. Dominique van der Mensbrugghe & John C. Beghin & Don Mitchell, 2003. "Modeling Tariff Rate Quotas in a Global Context: The Case of Sugar Markets in OECD Countries," Food and Agricultural Policy Research Institute (FAPRI) Publications 03-wp343, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  4. Moyo, Sibusiso & Spreen, Thomas H., 2011. "An Update on the Consequences of EU Sugar Reform," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 2(1).
  5. Grethe, Harald & Nolte, Stephan & Banse, Martin, 2008. "Modelling The Effects Of Eu Sugar Market Liberalization On Area Allocation, Production And Trade," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6329, European Association of Agricultural Economists.
  6. Zhuang, Renan & Koo, Won W., 2006. "Impacts of Sugar Free Trade Agreements on the U.S. Sugar Industry," 2006 Annual meeting, July 23-26, Long Beach, CA 21486, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Nolte, Stephan, 2008. "The Future Of The World Sugar Market--A Spatial Price Equilibrium Analysis," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6663, European Association of Agricultural Economists.
  8. Gohin, Alexandre & Bureau, Jean-Christophe, 2005. "Sugar Market Liberalization: Modeling the EU Supply of "C" Sugar," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24740, European Association of Agricultural Economists.
  9. Elobeid, Amani & Tokgoz, Simla, 2008. "AJAE Appendix for “Removing Distortions in the U.S. Ethanol Market: What Does It Imply for the United States and Brazil?â€," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 90(4), November.
  10. Lee, Dae-Seob & Kennedy, P. Lynn, 2005. "Demand behavior of U.S. high fructose corn syrup (HFCS) and its implication for the U.S. sweetener market: a cointegration analysis," 2005 Annual meeting, July 24-27, Providence, RI 19564, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  11. Lee, Young-Jae, 2008. "Theoretical Examination of the Conditions of Best Management Practices Adoption and the Easing of Trade Distortion for Sugar," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6826, Southern Agricultural Economics Association.
  12. Fabiosa, Jacinto F. & Beghin, John C. & Dong, Fengxia & Elobeid, Amani & Tokgoz, Simla & Yu, Tun-Hsiang, 2010. "The Global Bioenergy Expansion: How Large Are the Food−Fuel Trade-Offs?," Staff General Research Papers 31603, Iowa State University, Department of Economics.

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