Bloomberg News

Scrapping Sugar Quotas Would Cut U.S. Prices 33%, Study Says

November 17, 2011

Nov. 17 (Bloomberg) -- Removing U.S. limits to sugar imports would cut retail prices of the sweetener by as much as 33 percent and add as many as 20,000 jobs, according to an Iowa State University study commissioned by a food-industry group.

Raw-sugar imports would jump by as much as 84 percent if the government allowed unlimited shipments, reducing prices and encouraging more production and consumption of sweetened products, researchers John Beghin and Amani Elobeid at Iowa State wrote in their 64-page analysis. The Sweetener Users Association in Washington commissioned the study.

The researchers based the findings on the extra supply that would be available in the U.S. should import limits be removed, as well as the difference between world sugar prices and the higher domestic price currently paid by food and beverage makers.

Sally Klusaritz, a spokeswoman at the U.S. Department of Agriculture in Washington, said she hadn’t seen the study and wouldn’t have any immediate comment.

Sugar is the only major agricultural commodity produced in the U.S. that is subject to import quotas. The limits were established to benefit domestic growers. Retail-sugar prices have gained 9.5 percent since the start of January, more than twice the rate of food inflation.

The value to U.S. consumers of eliminating the sugar program would be $3.5 billion in 2014, with that amount declining to $2.93 billion by 2020, the study said. The increase in the number of food-industry jobs would peak at about 20,000 in 2015 and slow to 18,000 by 2020.

Raw-sugar prices worldwide would increase by 2 percent to 4 percent on increased U.S. demand, according to the study.

--Editors: Steve Stroth, Daniel Enoch

To contact the reporter on this story: Joe Richter in New York at jrichter1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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