IBUS 190-02 Team 6
Arias Belinda
Hanson Rebecca
Del Cid Alan
Perez Jovanny
Gianni Tonietta
US Sugar Subsidies Case
Who are the winners? Who are the losers?
The winners in this case would be the U.S. producers, primarily farmers who grow sugar beets
and cane. Due to these subsidies, price supports, import quotas, and tariffs, the government
can guarantee 85% of the market to U.S. producers of sugar.
The losers would be consumers of U.S. sugar due to the extremely high prices of sugar. U.S.
sugar prices have averaged between, 64 and 92 percent higher than the world price of sugar.
Because of the heightened prices of sugar, small candy producers such as the makers of Dum
Dums are moving their production to other countries such as Mexico, in order to take advantage
of their low sugar prices.
Cost
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Yearly cost of $2.9-$3.5 billion on U.S. consumers due to high sugar prices
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High U.S. sugar price (twice as much as the world price)
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Offshoring production of U.S. candy makers (loss of jobs)
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Surplus sugar is sold to producers of Ethanol at a loss due to set floor price
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Government spending due to set floor price
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Adds to our trade deficit
Benefit
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Sugar producers are guaranteed 85% of market
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Government insures price stability of sugar with set floor price
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Sugar producers are protected from foreign sugar producers
Explain paradox (US promotes and practices free trade)
The paradox is that the trade of sugar is not necessarily "free". The government intervenes in
order to help American sugar farmers. The government makes use of subsidies, price supports,
import quotas, and tariffs to guarantee 85% of the market to U.S. sugar producers.
Would you change it?
In order to reap the full benefits of free trade, we believe that these "temporary" subsidies
should be abandoned. According to a recent academic study, deregulating the sugar industry
would lead to a net creation of about 20,000 new jobs in the U.S.. Moreover, it would help
reduce the current U.S. budget deficit by reducing the amount of imports of products containing
sugar.
