Sugar and Other Sweeteners

In 1977 the United States used an estimated 11.2 million tons of sugar but produced only 6.2 million tons. Unlike many countries, the U.S. Government does not set domestic sugar prices; consequently, the world sugar price influences both imported and domestic prices. While high fructose corn syrup sales are currently depressed due to low sugar prices, this sweetener could provide a counterweight to high sugar prices. An International Sugar Agreement, designed to stabilize world sugar prices within an 11- to 21-cent per pound range, became effective on January 1, 1978, but United States participation is subject to ratification by the Senate.

GAO analyzed various factors that will affect the establishment of a national sweetener policy. A relatively high price support level will protect more producers, encourage more domestic sugar production, and accelerate competing sweeteners' growth; on the other hand, a relatively low price support level will encourage higher cost producers to leave the industry, limit competing sweeteners' growth, and raise consumer prices to a lesser extent than would a higher support level. Quotas on domestic production as well as imports would provide greater protection for the less efficient portions of the sugar industry, retard competing sweeteners' growth, and dampen competition between competing sweeteners. Tariffs and fees, the method used in 1978, would provide revenues and allow more industry competition, but its effectiveness could be limited. Government support payments as an alternative would entail Treasury outlays, place competing sweeteners at a disadvantage, and require the concurrent use of import protection.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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