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The Cost Of The U.S. Sugar Program Revisited

  • John C. Beghin
  • Barbara El Osta
  • Jay R. Cherlow
  • Samarendu Mohanty

The article analyzes the welfare cost of the U.S. sugar program using a multimarket model of U.S. sweetener markets. The latter includes raw crops, sugar extraction and refining, and sweetener users (food-processing industries and final consumers). The authors address the industrial organization of food industries using sweeteners and treat the United States as a large importer. With the removal of the program, this article estimates (all figures in 1999 dollars) that in 1998 cane growers, sugar beet growers, and processors would have lost $307, $650, and $89 million, respectively; sweetener users would have gained $1.9 billion. World prices would have increased by 13.2%. The deadweight loss of the program is estimated at $532 million. Copyright 2003 Western Economic Association International.

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Article provided by Western Economic Association International in its journal Contemporary Economic Policy.

Volume (Year): 21 (2003)
Issue (Month): 1 (01)
Pages: 106-116

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Handle: RePEc:bla:coecpo:v:21:y:2003:i:1:p:106-116
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  1. Rendleman, C. Matthew & Hertel, Thomas W., 1993. "Do Corn Farmers Have Too Much Faith In The Sugar Program?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 18(01), July.
  2. Chad E. Hart & Bruce A. Babcock, 2001. "Implications of the WTO on the Redesign of U.S. Farm Policy," Food and Agricultural Policy Research Institute (FAPRI) Publications 01-bp32, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  3. Haley, Stephen L., 1998. "Modeling The U.S. Sweetener Sector: An Application To The Analysis Of Policy Reform," Working Papers 14610, International Agricultural Trade Research Consortium.
  4. Sanjib Bhuyan & Rigoberto A. Lopez, 1997. "Oligopoly Power in the Food and Tobacco Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1035-1043.
  5. Catherine J. Morrison, 1990. "Market Power, Economic Profitability and Productivity Growth Measurement: An Integrated Structural Approach," NBER Working Papers 3355, National Bureau of Economic Research, Inc.
  6. S. McCorriston & C. W. Morgan & A. J. Rayner, 1998. "Processing Technology, Market Power and Price Transmission," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(2), pages 185-201.
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