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Quantifying the Price Effects of Over-Quota Sugar Imports on the U.S. Domestic Market

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Listed:
  • Arita, Shawn
  • Wang, Ming
  • Steinbach, Sandro

Abstract

This study evaluates the effects of Tier 2 over-quota sugar imports on the U.S. sugar market at the request of U.S. Senator John Hoeven. Using a partial equilibrium trade model calibrated to the USDA Needs Formula and a reduced-form stocks-to-use regression estimated from WASDE data, the analysis finds that Tier 2 imports lowered U.S. domestic raw sugar prices by about 5 to 8 cents per pound during FY2025 to FY2026. The price effect arose mainly because over-quota imports displaced administered imports from Mexico that had helped stabilize domestic supplies and support the targeted 13.5 percent ending stocks-to-use ratio. As Tier 2 imports increased, Mexico’s allocation under the Needs Formula was compressed and excess supply accumulated above the policy target. Estimated annual revenue losses range from $0.9 to $1.5 billion. A refined-adjusted estimate that applies amplified raw-to-refined pass-through to both the beet and cane segments implies an industry-wide loss of $1.3 to $1.8 billion, with the sugar beet segment absorbing the majority.

Suggested Citation

  • Arita, Shawn & Wang, Ming & Steinbach, Sandro, 2026. "Quantifying the Price Effects of Over-Quota Sugar Imports on the U.S. Domestic Market," ARPC White Paper 397832, North Dakota State University.
    • Handle: RePEc:ags:arpcwp:397832
    DOI: 10.22004/ag.econ.397832
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    References listed on IDEAS

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