Recapping the Effects of the US Sugar Program

Key Points

• The US sugar program relies on import quotas and limits on domestic production to ensure domestic prices for raw and refined sugar are, on average, about 100 percent higher than world prices.
• A recent short article focuses on misleading claims by the American Sugar Alliance (ASA) about the sugar program that have been consistently debunked by a wide range of peer-reviewed studies.
• In contrast to long-standing assertions by industry groups such as the ASA, the US sugar program has been shown to cost consumers $2.4–$4 billion a year and induce losses of 17,000 to 20,000 jobs in the food processing and confectionery industries.
• The costs the program imposes on the US economy as a whole substantially exceed any benefits that accrue to the 4,000 or so farms that raise sugar beet and sugarcane, many of which also plant most of their cropland to other heavily subsidized commodities such as corn and soybeans.

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Introduction

A recent short article by the American Sugar Alliance (ASA), the main lobby group of US sugar producers, repeats old arguments used to justify current US sugar policy, all of which have been consistently debunked by peer-reviewed empirical studies published in leading scholarly journals.¹ The ASA article also added a new claim that the US sugar program does not hurt food processing firms that use sugar. Interestingly, this claim is based on a recent report commissioned by the ASA.²

Given the ASA’s claims and the new report, it is worth recapping what the evidence tells us about the sugar program’s impacts and then revisiting the arguments advanced by the ASA and the report it commissioned.

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Notes

1. See, for example, Gwo‐Jiun M. Leu, Andrew Schmitz, and Ronald D. Knutson, “Gains and Losses of Sugar Program Policy Options,” American Journal of Agricultural Economics 69, no. 3 (1987): 591–602; John C. Beghin and Amani Elobeid, “The Impact of the US Sugar Program Redux,” Applied Economic Perspectives and Policy 37, no. 1 (2015): 1–33; John C. Beghin et al., “The Cost of the US Sugar Program Revisited,” Contemporary Economic Policy 21, no. 1 (2003): 106–16; Remy Jurenas, “Sugar Program: The Basics,” Congressional Research Service, December 14, 2014, https://digital.library.unt.edu/ark:/67531/metadc463504/m1/1/high_res_d/R42535_2012Dec14.pdf; Rachel Dardis and Carol Young, “The Welfare Loss from the New Sugar Program,” Journal of Consumer Affairs 19, no. 1 (1985): 163–76; David Abler et al., “Changing the US Sugar Program into a Standard Crop Program: Consequences Under the North American Free Trade Agreement and Doha,” Applied Economic Perspectives and Policy 30, no. 1 (2008): 82–102; Michael K. Wohlgenant, “Effects of Trade Liberalization on the World Sugar Market,” Food and Agriculture Organization of the United Nations, 1999, https://www.fao.org/publications/card/en/c/c7ef99e7-144c-558f-ae6d-f67b0949243d/; Donald O. Mitchell, “Sugar Policies: An Opportunity for Change,” in Global Agricultural Trade and Developing Countries, ed. Ataman Aksoy and John C. Beghin (Washington, DC: World Bank Publications, 2004): 141–60; and Amani Elobeid and John C. Beghin, “Multilateral Trade and Agricultural Policy Reforms in Sugar Markets,” Journal of Agricultural Economics 57, no. 1 (2006): 23–48.
2. American Sugar Alliance, “Study Rejects Candy Lobby’s Long-Held Accusations,” Sugar Producer, October 29, 2021, https://www.sugarproducer.com/2021/10/study-rejects-candy-lobbys-longheld; and Karen L. DeLong and Carlos Trejo-Pech, “Analyzing Determinants of Sugar-Containing-Product Prices,” American Sugar Alliance, October 27, 2021, https://sugaralliance.org/wp-content/uploads/2021/10/DeLong-Sugar-Report-October-2021.pdf.