Case study:

Sugar is one of life's small pleasures. It can be extracted and refined from sugarcane and sugar beets, two crops that can be grown in a variety of climates around the world. Sugar is both plentiful and cheap. As a result, Americans enjoy a lot of itan average of over 50 pounds of refined sugar per person each year! We would consume a lot more sugar if it were not subject to price controls. After the War of 1812, struggling sugarcane producers asked the government to pass a tariff (tax) that would protect domestic production. Over the years, price supports of all kinds have served to keep domestic sugar production high. The result is an industry that depends on a high price to survive. Under the current price-support system, the price of U.S.-produced sugar is roughly two to three times the world price. This situation has led to a bizarre set of incentives whereby U.S. farmers grow more sugar than they should and use land that is not well suited to the crop. For instance, sugarcane requires a subtropical climate, but most of the U.S. crop is grown in Louisiana, a region that is prone to hurricanes in the summer and killing freezes in the late fall. As a result, many sugarcane crops there are completely lost. Why do farmers persist in growing sugarcane in Louisiana? The answer lies in the political process:sugar growers have effectively lobbied to keep prices high through tariffs on foreign imports. Because lower prices would put many U.S. growers out of business and cause the loss of many jobs, politicians have given in to their demands. Meanwhile, the typical sugar consumer is largely oblivious to the political process that sets the price floor. It has been estimated that the sugar subsidy program costs consumers over $1 billion a year. To make matters worse, thanks to corn subsidies, high-fructose corn syrup has become a cheap alternative to sugar and is often added to processed foods and soft drinks. In 1980, Coca-Cola replaced sugar with high-fructose corn syrup in its U.S. factories to reduce production costs. However, Coca-Cola continues to use sugarcane in many Latin American countries because it is cheaper there. Research shows that high-fructose corn syrup causes a metabolic reaction that makes people who ingest it more inclined to obesity. This is an example of an unintended consequence that few policy makers could have imagined. There is no reason why the United States must produce its own sugar cane. Ironically, sugar is cheaper in Canada than in the United States primarily because Canada has no sugar growersand thus no trade restrictions or government support programs

Questions to answer

1), Briefly explain what the case study is about, summarize it. Who purchases the surplus sugar i.e. What happens to unwanted sugar surplus?