The Cost of the U.S. Sugar Program Revisited

We analyze the welfare cost of the U.S. sugar program, using a multimarket model of U.S. sweetener markets, which includes raw crops, sugar extraction and refining, and sweetener users (food-processing industries and final consumers). We address the industrial organization of food industries using sweeteners and treat the United States as a large importer. With the removal of the program, cane growers, sugar beet growers and processors would lose $307, $650, and $89 million (1999 prices), respectively; sweetener users would gain $1.9 billion; World prices would increase by 13.2 percent. The deadweight loss of the program is estimated at $532 million.