Economics and the mid-life crisis have much in common: Both dwell on foregone opportunities

C'est la vie; c'est la guerre; c'est la pomme de terre . . . . . . . . . . . . . email: jpalmer at uwo dot ca

. . . . . . . . . . .Richard Posner should be awarded the next Nobel Prize in Economics . . . . . . . . . . . .

Friday, March 25, 2005

The U.S. Sugar Industry
Under Attack on Three Fronts

U.S. consumers pay a price for sugar that is roughly 50% higher than it would be if there were no import barriers in the U.S. sugar industry. The reason these barriers still exist is that the sugar industry lobby has been very effective in maintaining protection of its members. But the sugar industry is under attack.
  1. The U.S. is continuing to negotiate free-trade agreements with countries in Central and South America, where sugar can be grown at substantially prices than it can in the southern U.S.
  2. There is strong pressure to reduce agricultural subsidies to industries like sugar, partly for trade reasons and partly for efficiency reasons.

Some producers are revamping their production facilities and might be able to withstand these changes. See here for one example (h/t to BF for this link). United States Sugar Corp is increasing its capital (with embedded technological change) and reducing labour inputs.

By 2007 -- when the new automated mill is scheduled to start crushing
cane -- the workforce from the two existing mills will be cut in half, dropping from 576 workers to 226...

Big Sugar is facing pressure on various fronts: Sugar processors and environmental groups have tangled for years over cleanup of the Everglades, real estate development is coming closer -- especially in Palm Beach County, and global free trade has meant Third World countries are increasing their demands that developed nations open their markets by eliminating subsidies, price supports and tariffs. The trend could upset the U.S. sugar quota program....

Now farming on 196,000 acres in south-central Florida, the company is
determined that its capital improvements will be the key to its future.
''This company is not sitting around waiting for the government to
protect us from foreign competition,'' [said Robert Coker, U.S. Sugar's senior vice president, public affairs.].

The third front for the attack? The war on obesity, which will not be nearly so effective so long as we consumers do not individually bear the full health costs of our eating and exercise decisions. In fact, sugar consumption, per capita, is increasing.
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