The Cost of the U.S. Sugar Program Revisited

Abstract

Using a multimarket model of U.S. sweeteners, the authors revisit the cost of the U.S. sugar program by analyzing the welfare implications of its removal. Their approach addresses the industrial organization of food industries that use sweeteners and treats the United States as a large importer. The authors estimate that, with the removal of the U.S. sugar program, cane growers, sugar beet growers, and beet processors would lose, respectively, $307 million,$650 million, and $89 million. Sweetener users would gain$1.9 billion. The deadweight loss of the current sugar program would be $532 million (all estimates are based on 1999 prices). World prices would increase by 13.2 percent with the removal of the program