Analysis of the United States' Sugar Industry

abstract: Unrestricted Mexican exports of sugar into the U.S. is considered the most pressing issue facing the U.S. sugar industry. The goal of this dissertation is to analyze the trade of sugar between Mexico and the U.S. as well as analyze additional primary issues confronting the U.S. sugar industry. Chapters 1 and 2 provide an introduction to the U.S. sugar industry. Chapters 3 through 6 develop trade models which analyze sugar trade between Mexico and the U.S. The trade models estimate how NAFTA, USDA sugar forecast errors and Mexican ownership of twenty percent of the Mexican sugar industry each impact U.S. producer surplus and Mexican welfare. Results validate that U.S. producer surplus and in some instances Mexican welfare were decreased by full implementation of NAFTA. U.S. producer surplus and Mexican welfare were decreased due to USDA sugar production forecasting errors. U.S. producer surplus would be increased if the Mexican government did not own twenty percent of Mexican sugar production. Using an online choice experiment, Chapter 7 assesses U.S. consumers' preferences and willingness to pay (WTP) for imported and genetically modified (GM) labeled sugar and sugar in soft drinks. Results indicate that consumers prefer bags of sugar and soft drinks labeled as "Not GM". Furthermore, consumers prefer sugar from Canada and the U.S. over sugar from Mexico, Brazil and the Philippines. Evidence is also provided that participants are more likely to choose actual products in the choice set rather than the "none of these" options when controlling for hypothetical bias by using consequentiality techniques. A non-hypothetical experimental auction was used in Chapter 8 to determine consumers' WTP for soft drinks labeled with sweetener and calorie information and analyzed the role of taste panels in an experimental auction. Results indicate that sugar is consumers' most preferred sweetener and calorie labeling is ineffective at influencing consumers to choose healthier soft drinks. Including taste in an experimental auction caused significant reductions in consumers' WTP for all soft drinks. Chapter 9 concludes by summarizing the results of this dissertation and discussing the future challenges facing the U.S. sugar industry.

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