The Cost of the U.S. Sugar Program Revisited
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The Center for Agricultural and Rural Development (CARD) conducts innovative public policy and economic research on agricultural, environmental, and food issues. CARD uniquely combines academic excellence with engagement and anticipatory thinking to inform and benefit society.
CARD researchers develop and apply economic theory, quantitative methods, and interdisciplinary approaches to create relevant knowledge. Communication efforts target state and federal policymakers; the research community; agricultural, food, and environmental groups; individual decision-makers; and international audiences.
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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.