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Sugar policy and reform

  • Larson, Donald F.
  • Borrell, Brent

Reviewing cross-country experience with sugar policies, and policy reform, the authors conclude that long-standing government interventions - rooted in historical trade arrangements, fear of shortages, and conflicting interests between growers, and sugar mills - often displace both the markets, and the institutions required to produce efficient outcomes. Arrangements rooted in colonial eras, still shape policies, and trade in the United States, the European Union (EU), and many developing countries. Once policies, and institutions are put in place, households, and the value of investments grow dependent on them, even as their usefulness fades. Firms and households make decisions that are costly to reverse. And the result is a legacy of path-dependent policies, in which approaches, and instruments are greatly influenced by past agreements, and previous interventions. The cumulative effects of these interventions are embodied in livelihoods, political institutions, capital stocks, and factor markets - which not only dictate the starting point for reform, but also determine which reform paths are feasible. Experiments with public ownership, common in many countries, have not succeeded. So most countries have initiated some measure of market reform. And events relating to NAFTA, Lome, and expansion of the EU, may bring about significant changes in the EU, and US sugar regimes, with cascading effects on other countries. Common problems in the sector include determining cane quality, finding methods for fairly sharing revenues from joint production, finding ways to take advantage of preferential trade arrangements with minimal negative consequences, finding ways to finance, and encourage research, and other activities with common benefits, identifying practices that facilitate equitable, sustainable privatization, and determining the relationship between sugar market reform, and markets in land, water, credit, and other inputs.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2602.

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Date of creation: 31 May 2001
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Handle: RePEc:wbk:wbrwps:2602
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  1. Sergei Strokov & William H. Meyers, 1996. "Producer Subsidy Equivalents and Evaluation of Support to Russian Agricultural Producers," Food and Agricultural Policy Research Institute (FAPRI) Publications 96-wp168, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  2. Sergei Strokov & William H. Meyers, 1996. "Producer Subsidy Equivalents and Evaluation of Support to Russian Agricultural Producers," Center for Agricultural and Rural Development (CARD) Publications 96-wp168, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  3. Valdés, Alberto & Zietz, Joachim A., 1980. "Agricultural protection in OECD countries: its cost to less-developed countries," Research reports 21, International Food Policy Research Institute (IFPRI).
  4. Borrell, Brent & Duncan, Ronald C, 1992. "A Survey of the Costs of World Sugar Policies," World Bank Research Observer, World Bank Group, vol. 7(2), pages 171-94, July.
  5. Borrell, Brent & Bianco, Jose R. & Bale, Malcolm D., 1994. "Brazil's sugarcane sector : a case of lost opportunity," Policy Research Working Paper Series 1363, The World Bank.
  6. Joachim Zietz, 1986. "The potential benefits to LDCs of trade liberalization in beef and sugar by industrialized countries," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 122(1), pages 93-112, March.
  7. Valdes, Alberto, 1987. "Agriculture in the Uruguay Round: Interests of Developing Countries," World Bank Economic Review, World Bank Group, vol. 1(4), pages 571-93, September.
  8. Pollitt, Brian H & Hagelberg, G B, 1994. "The Cuban Sugar Economy in the Soviet Era and After," Cambridge Journal of Economics, Oxford University Press, vol. 18(6), pages 547-69, December.
  9. Gilbert, Christopher L., 1996. "International Commodity Agreements: An obituary notice," World Development, Elsevier, vol. 24(1), pages 1-19, January.
  10. Gilbert, Christopher L, 1985. "Futures Trading and the Welfare Evaluation of Commodity Price Stabilisation," Economic Journal, Royal Economic Society, vol. 95(379), pages 637-61, September.
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