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The Mexican sugar industry : problems and prospects

Author

Listed:
  • Borrell, Brent

Abstract

The Mexican sugar industry operates under strict government controls. The sugar parastatal, AZUCAR, and other state agencies govern virturally all aspects of pricing and, until recently, AZUCAR controlled virtually all aspects of marketing. The purpose of this study is to make transparent the main economic effects of existing sugar policies. Three broad measures are used to estimate the resource misallocation effects of intervention: the nominal rate of protection, the effective rate of assistance and the net subsidy equivalent. Theoretical arguments are also used to demonstrate other potential inefficiencies in resource use. To estimate the effects of efficiency-improving policies, an economic model of Mexican production, demand, stock demand and cane-pricing arrangements is constructed. This model is linked to a model of the world sugar market to evaluate the trade and other economic opportunities which should arise from policy reforms.

Suggested Citation

  • Borrell, Brent, 1991. "The Mexican sugar industry : problems and prospects," Policy Research Working Paper Series 596, The World Bank.
    • Handle: RePEc:wbk:wbrwps:596
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