The World Sugar Market--Government Intervention and Multilateral Policy Reform

Abstract

Extensive government intervention in sugar markets significantly affects sugar production, consumption, and trade. Many countries provide support for sugar producers, placing the cost on consumers and/or taxpayers. A trade liberalization scenario is analyzed in which only the industrial market economies are assumed to liberalize their agriculture. The analysis shows that compared with actual 1986-88 levels, liberalized levels of sugar production in 1986-88 would have been lower in the industrial market economies, and higher in the less -developed countries. Liberalization would have led to an increase in the world sugar price of 10-30 percent from its 1975-89 longrun average level, and would have reduced world price variability while increasing domestic price variability in many industrial market economies. Sugar production in the United States would have been lower, and consumption slightly higher. World sugar trade patterns would have shifted dramatically, but overall trade volume would have increased only marginally. Sugar substitutes, primarily high fructose starch syrups, would have increased market share, mainly in a few industrial market economies.