Sugar Subsidies

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 Yearly cost of $2.9-$3.5 billion on U.S. consumers due to high sugar prices High U.S. sugar price (twice as much as the world price) Offshoring production of U.S. candy makers (loss of jobs) Surplus sugar is sold to producers of Ethanol at a loss due to set floor price Government spending due to set floor price Adds to our trade deficit Benefit Sugar producers are guaranteed 85% of market Government insures price stability of sugar with set floor price 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.
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