Skip Navigation
Back to PolicyBot

Solving the Sugar Subsidy Problem

November 4, 2013
By Tom Giovanetti

in this policy document at IPI, Tom Giovanetti writes that agricultural producers are an influential political constituency. This results in a web of harmful and market distorting agricultural trade policies globally.

for sale sign

in this policy document at IPI, Tom Giovanetti writes that agricultural producers are an influential political constituency. This results in a web of harmful and market distorting agricultural trade policies globally. Of all these distorted agricultural commodity markets, sugar is almost certainly the worst. An attractive solution would seem to be for the United States to simply unilaterally drop all domestic subsidies for the sugar industry and let American consumers and manufacturers benefit from the lower sugar prices that would likely result. But what happens after foreign sources have displaced domestic supply? Prices go back up, and likely higher than previously due to the domestic competition displaced through dumping. Ultimately, the problem of sugar subsidies will never be solved until WTO member nations can agree to a freer and more sustainable global sugar trade system. Such a system should be the strategic goal of U.S. sugar policy.