Today the front page of the Wall Street Journal published an article (subscription required) focusing on the current fight to increase the amount of sugar certain countries can export duty-free to the U.S. Those quotas are part of the U.S. sugar program, together with the program’s price supports and domestic production restrictions; it has long needed to be dismantled. But the major opportunity to do so – the last farm bill — just made the sugar program worse. The centrally controlled program results in U.S. sugar prices usually double the world price, which means consumers pay more for many products, and sweetener-using companies look for opportunities in other countries where their sugar costs are less.
There is limited flexibility in the sugar quota system, whereby about 40 countries are allowed to export a predetermined amount of sugar without tariffs; above that amount, stiff tariffs are levied. Before April 1 the U.S. Secretary of Agriculture can increase the quotas if there is an emergency or disaster. After April 1, the USDA can reallocate the quotas or increase them. Sweetener users say that more imports are needed mainly because of the price differential between the U.S. and world sugar price but also because users may face a shortage of domestic sugar in the near future.