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1. Who benefits from subsidies to U.S. sugar producers? Who loses? 2. Do the benefits of U.S. government support to the U.S. sugar industry outweigh the losses? 3. What do you think would happen if the U.S. government removed all support for U.S. sugar producers?

1. Who benefits from subsidies to U.S. sugar producers? Who loses? 2. Do the benefits of U.S. government support to the U.S. sugar industry outweigh the losses? 3. What do you think would happen if the U.S. government removed all support for U.S. sugar producers?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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many observers thought that 2013 would be the year that the sugar pro- grams were finally abandoned. The farm bill was up for renewal, and the State Working Paper 13-WP 538, May 2013, www.card.iastate.edu/publications/ dbs/pdffiles/13wp538.pdf. sugar support programs were held up as an example of how wasteful gov- ernment subsidies are. However, sugar producers spent some $20 million CASE DISCUSSION QUESTIONS on political lobbying between 2011 and 2013. Partly due to their influ- ence, the U.S. Senate voted 54 to 45 against any reform in the sugar pro- 1. Who benefits from subsidies to U.S. sugar producers? Who loses? 2. Do the benefits of U.S. government support to the U.S. sugar industry grams. The majority included 20 out of 45 Republican senators, most of whom publicly rail against this kind of government intervention. Appar- ently, however, political expediency required that they support interven- tion in this case. outweigh the losses? 3. What do you think would happen if the U.S. government removed all support for U.S. sugar producers? 4. Government support programs for sugar producers were introduced in the 1930s, yet they are still in place today, long after the original rationale disappeared. What does this tell you about political decisions Sources: George F. Will, "Congress Needs to Stop Subsidies to Sugar Farmers," The Washington Post, June 7, 2013; Ron Nixon, "American Candy Makers, Pinched by Inflated Sugar Prices, Look Abroad," The New York Times, October 30, 2013; J. Beghinand and A. Elobeid, "The Impact of the U.S. Sugar Program Redux," lowa relating to international trade? 5. If you had the power to make changes here, what would you do and why?
Transcribed Image Text:many observers thought that 2013 would be the year that the sugar pro- grams were finally abandoned. The farm bill was up for renewal, and the State Working Paper 13-WP 538, May 2013, www.card.iastate.edu/publications/ dbs/pdffiles/13wp538.pdf. sugar support programs were held up as an example of how wasteful gov- ernment subsidies are. However, sugar producers spent some $20 million CASE DISCUSSION QUESTIONS on political lobbying between 2011 and 2013. Partly due to their influ- ence, the U.S. Senate voted 54 to 45 against any reform in the sugar pro- 1. Who benefits from subsidies to U.S. sugar producers? Who loses? 2. Do the benefits of U.S. government support to the U.S. sugar industry grams. The majority included 20 out of 45 Republican senators, most of whom publicly rail against this kind of government intervention. Appar- ently, however, political expediency required that they support interven- tion in this case. outweigh the losses? 3. What do you think would happen if the U.S. government removed all support for U.S. sugar producers? 4. Government support programs for sugar producers were introduced in the 1930s, yet they are still in place today, long after the original rationale disappeared. What does this tell you about political decisions Sources: George F. Will, "Congress Needs to Stop Subsidies to Sugar Farmers," The Washington Post, June 7, 2013; Ron Nixon, "American Candy Makers, Pinched by Inflated Sugar Prices, Look Abroad," The New York Times, October 30, 2013; J. Beghinand and A. Elobeid, "The Impact of the U.S. Sugar Program Redux," lowa relating to international trade? 5. If you had the power to make changes here, what would you do and why?
closing case Sugar Subsidies Drive Candy Makers Abroad Back in the 1930s at the height of the Great Depression, the U.S. govern- from flooding the U.S. market and driving them out of business. Opponents ment stepped in to support the U.S. sugar industry with a combination of of the practice include numerous small candy producers. Many of them subsidies, price supports, import quotas, and tariffs. These actions were complain about the high U.S. price for sugar. Increasingly, they have re- meant to be temporary, but as of 2015 they are still in place. Under poli- sponded by moving production offshore. For example, the Spangler Candy cies approved in the 2008 farm bill, the government guarantees 85 per- Company, the maker of Dum Dums, has moved 200 jobs from Ohio to cent of the market for U.S. producers, primarily farmers growing sugar Juarez, Mexico, where it makes candy canes that are then imported back beets and cane. The remaining 15 percent is allocated for imports from into the United States. Similarly, Adams & Brooks, a California-based candy certain countries at a preferential tariff rate. The government also sets a company, has shifted two-thirds of its production across the border to floor price for sugar. If the price falls below the floor, the government steps Mexico in response to higher U.S. sugar prices. in to purchase excess supply, driving the price back up again. The surplus is then sold at a loss to producers of ethanol. A significant U.S. sugar har- benefit 4,700 sugar producers, while imposing costs of $2.9 to $3.5 billion vest in 2013 required the government to spend some $300 million to prop per annum on U.S. consumers due to higher sugar prices. The same re- up U.S. sugar prices. As a result of these policies, between 2010 and 2013, search predicts that removing the support programs would lead to the net the U.S. sugar price has averaged between 64 and 92 percent higher than creation of 17,000 to 20,000 new jobs in the United States, while dramati- the world price of sugar. American sugar producers say that the federal programs are necessary to keep big sugar-producing countries such as Brazil, India, and Thailand A recent academic study suggest that the U.S. sugar policies primarily cally reducing imports of products containing sugar. Given the benefits of removing sugar support programs and all the talk about deregulation and reducing the budget deficit in Congress,
Transcribed Image Text:closing case Sugar Subsidies Drive Candy Makers Abroad Back in the 1930s at the height of the Great Depression, the U.S. govern- from flooding the U.S. market and driving them out of business. Opponents ment stepped in to support the U.S. sugar industry with a combination of of the practice include numerous small candy producers. Many of them subsidies, price supports, import quotas, and tariffs. These actions were complain about the high U.S. price for sugar. Increasingly, they have re- meant to be temporary, but as of 2015 they are still in place. Under poli- sponded by moving production offshore. For example, the Spangler Candy cies approved in the 2008 farm bill, the government guarantees 85 per- Company, the maker of Dum Dums, has moved 200 jobs from Ohio to cent of the market for U.S. producers, primarily farmers growing sugar Juarez, Mexico, where it makes candy canes that are then imported back beets and cane. The remaining 15 percent is allocated for imports from into the United States. Similarly, Adams & Brooks, a California-based candy certain countries at a preferential tariff rate. The government also sets a company, has shifted two-thirds of its production across the border to floor price for sugar. If the price falls below the floor, the government steps Mexico in response to higher U.S. sugar prices. in to purchase excess supply, driving the price back up again. The surplus is then sold at a loss to producers of ethanol. A significant U.S. sugar har- benefit 4,700 sugar producers, while imposing costs of $2.9 to $3.5 billion vest in 2013 required the government to spend some $300 million to prop per annum on U.S. consumers due to higher sugar prices. The same re- up U.S. sugar prices. As a result of these policies, between 2010 and 2013, search predicts that removing the support programs would lead to the net the U.S. sugar price has averaged between 64 and 92 percent higher than creation of 17,000 to 20,000 new jobs in the United States, while dramati- the world price of sugar. American sugar producers say that the federal programs are necessary to keep big sugar-producing countries such as Brazil, India, and Thailand A recent academic study suggest that the U.S. sugar policies primarily cally reducing imports of products containing sugar. Given the benefits of removing sugar support programs and all the talk about deregulation and reducing the budget deficit in Congress,
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