The US first started this policy in 1934 during the depression era by passing the sugar act. The act was created due to overproduction of sugar in the United States causing sugar prices to be very low. This act was meant to protect sugar growers in America. Later the law was added to by making the limit of imported sugar to be around 15 percent of domestic consumption. This keeps American sugar prices above the the world prices.
This graph displays US vs World sugar prices and supports that US sugar prices are generally higher.
With this act restricting the amount of imported sugar there are those who benefit and those who are left out. The biggest supporters of this and the "winners" of this act are American sugar growers. with prices being higher they are able to make much more money and have much greater profits. The first "loser" would be countries that export sugar. The US is a huge markets and they are missing out on a lot of money. Countries like Australia miss out on millions of dollars of revenue from sugar they can't export to the United States.
The second loser would be us, the consumers. With the quota the supply of sugar is lowered which causes prices to be higher and a loss to consumers. Some estimates say it is around a 3 billion dollar loss. Another way consumers lose would be they have to use substitutes for sugar. The Quota is one of the reasons why many products that need sugar contain corn syrup which many believe to be less healthy and not taste as good. I believe that it would greatly benefit the US and many other countries if the United States reformed their sugar policy.
https://www.youtube.com/watch?v=MepXBJjsNxs
ReplyDeleteYou mentioned that the United States needs to reform its sugar policy. The above is a humorous video from the show Last Week Tonight that I think underlines why this won't happen. The sugar industry is massive and has a lot of lobbying power, and any threat to their profit margins will be met with a large cash "stimulus" to politicians who will fight sugar reform. It's clear that a new sugar policy would benefit everyone, but sadly in this political age it probably won't happen.
I didn't know about the sugar quota until we discussed it in class. What interested me the most was the comment that producing ethanol from sugar is cheaper than ethanol from corn. As mentioned reforming the sugar policy would be beneficial, but I also wonder what that would mean for corn producers. If ethanol was made from sugar instead of corn that would change the sugar and corn markets. In the long run it would benefit consumers in either market, but producers in each market would be worried about protecting their own well being.
ReplyDeleteI knew the sugar quota due to the reading about the revolution of Cube, which is related to the import policies of U.S. at that time. In my opinion, as the first comment mentioned, impute to the politic status quo in United States, which is complicated and irrational sometimes, it is hard to reform the policy just like what you talked about in your article. Therefore, you can not give an evaluation to a policy without including external factors, such as politics and world situation.
ReplyDeleteI strongly disagree with the U.S. sugar quota because it hurts the American consumers. The limitations on sugar that can be imported by the U.S. forces people to use alternatives such as high fructose corn syrup and other things that are not as pure or healthy. The limit on sugar also increases sugar prices in the U.S. higher than that of the world prices. This occurs because there is a high demand for sugar and a low supply. In the end, the only people benefiting are American Producers. In a way they can act as a monopoly and control prices.
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