The EU Sugar Policy Regime and Implications of Reform

51 Pages Posted: 14 Mar 2009

See all articles by David Kelch

David Kelch

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Johannes Umstaetter

affiliation not provided to SSRN

Aziz Elbehri

USDA - Economic Research Service

Date Written: July 1, 2008

Abstract

The European Union's sugar policy, in place since 1968, underwent its fi rst major reform in 2005 in response to mounting and unsustainable imbalances in supply and demand. The reform, however, targeted only a few policy instruments (intervention price cut, voluntary production quota buyout, and restrictions on nonquota sugar exports), while leaving other key policies unchanged (interstate quota trading, sugar-substitute competition, and import barriers). Consequently, the extent of the reform's impact is limited, compared with more far-reaching alternatives, particularly when the oligopolistic nature of the industry and its noncompetitive pricing behavior are taken into account. A modelbased analysis suggests that the reforms by themselves are unlikely to induce price adjustments suffi cient to reduce overproduction unless quotas and/or high tariffs are reduced.

Keywords: European Union, EU, sugar CMO, Common Market Organization, policyreform, trade, economic model Acknowledgments

Suggested Citation

Kelch, David and Umstaetter, Johannes and Elbehri, Aziz, The EU Sugar Policy Regime and Implications of Reform (July 1, 2008). Economic Research Report No. 59, Available at SSRN: https://ssrn.com/abstract=1359035 or http://dx.doi.org/10.2139/ssrn.1359035

David Kelch (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States

Johannes Umstaetter

affiliation not provided to SSRN

Aziz Elbehri

USDA - Economic Research Service ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5291 (Phone)
202-694-5823 (Fax)

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