THE FUTURE OF THE WORLD SUGAR MARKET--A SPATIAL PRICE EQUILIBRIUM ANALYSIS

A spatial price equilibrium (SPE) model of the world sugar market is programmed. The model coversmore than hundred regions and contains sugar in as a sole product. It has a detailed coverage ofpolicies and bilateral trade agreements. It is programmed as a mixed complementarity problem(MCP) in GAMS and uses the PATH solver. The SPE framework offers considerable advantages overother model approaches applied to the sugar market before.Four scenarios are simulated: A baseline scenario until 2015/16, accounting for implementation of theEU reform and market access commitments already decided upon. The liberalization scenariosinclude an implementation of the Falconer proposal for the current round of WTO negotiations, a fullliberalization by the EU and a liberalization of all sugar policies world-wide. In the latter the worldmarket price increases by around 30%.Results are discussed and related to special properties of the SPE approach. Strengths andweaknesses are identified and an outlook on the further refinement of the analysis is given.