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Abstract

We revisit the cost of the U.S. sugar program by analyzing the welfare implications of its removal. We use a multimarket model of U.S. sweetener markets, which includes raw crops, sugar extraction and refining, high-fructose corn syrup, and sweetener users (food-processing industries and final consumers). Our approach addresses the industrial organization of food industries using sweeteners and treats the United States as a large importer. We estimate that, with the removal of the program, cane growers, sugar beet growers, and beet processors would lose $307 million, $650 million, and $89 million (1999 prices), respectively. Sweetener users would gain $1.9 billion (1999 prices). The deadweight loss of the current sugar program is estimated at $532 million (1999 prices). World prices would increase by 13.2 percent with the removal of the program.

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