The case is mainly about how sugar subsidies to U.S sugar producers affects the industry and other related industries along with U.S economy. The subsidies are meant to be temporary but it was maintained for longer period from 1930s to 2015 by the political and controversial decisions. By the sugar subsidies U.S government wanted to help the local producers but its cost actually overweighed the benefits. The sugar cost raised. Many company offshored and many workers lost their jobs. Although the consequences of sugar support program gone wrong, the politicians did not support to deregulate the program which was not expected by the observers.

1. A Case Study ON
Sugar Subsidies Drive Candy Makers Abroad
International Business and Management
MGT-3201
SUBMITTED TO
Rabeya Rahaman
Assistant Professor
Department of Management Studies
Jagannath University
SUBMITTED BY
BIPASS
BBA 3rd
year 2nd
semester
SECTION: A
Department of Management Studies
Jagannath University
SUBMISSION DATE: /10/19

2. Group Members of
BIPASS
Serial
No.
Name ID No. Remarks
1. Nusrat Jahan Sumona B160202006
2. Jahidul Islam Pavel B160202012
3. Al Asmaul Hosna B160202035
4. Farhan Shehab B160202054
5. MD. Ismail Mazumder B160202076
6. MD. Biplop Sarkar B160202086

3. Case Overview
The case is mainly about how sugar subsidies to U.S sugar producers affects the industry and
other related industries along with U.S economy. The subsidies are meant to be temporary but
it was maintained for longer period from 1930s to 2015 by the political and controversial
decisions. By the sugar subsidies U.S government wanted to help the local producers but its
cost actually overweighed the benefits. The sugar cost raised. Many company offshored and
many workers lost their jobs. Although the consequences of sugar support program gone
wrong, the politicians did not support to deregulate the program which was not expected by the
observers.
Case Discussion Questions
1. Who benefits from subsidies to U.S sugar producers? Who loses?
Answer: From the subsidies some party get the benefits:
i. Sugar Producers/ Farmers: In the 2008 farm bill, U.S government guarantees 85
percent of the market for local producers. An academic study suggest that the sugar
policies benefits 4700 sugar producers.
ii. Ethanol Producers: U.S government sold the excessive supply of sugar at a loss to
ethanol producers.
The parties who loses:
i. Consumers: The academic study says that the sugar policy imposes costs of $2.9 to
$3.5 billion per annum on U.S consumers.
ii. Employment/Jobs: The sugar supporting program deprives about 17000 to 20000 new
jobs, and also increases unemployment rate.
iii. Small Candy Producers: For the high U.S price of sugar many companies offshored
their production.

4. 2. Do the benefits of U.S government support to the U.S sugar industry outweigh the
losses?
Answer: No, the benefits of government support to the sugar industry do not outweigh the
losses. Because the government support increases the price of sugar which deprives U.S
customers from low cost of sugar and also increases offshoring of production of many
companies. The support program only benefits the local producers but strategically they also
morally loses because of low competition.
About 17000 to 20000 new jobs could be created by removing the support program and the
U.S consumers could buy at the world price of sugar whereas they bought sugar at 64 and 92
percent higher than the world price. In 2013 government required to spend some $300 million
to prop up U.S sugar price.
On the other hand the sugar support policy helped 4700 local sugar producers, and ethanol
producers got sugar at a low cost. But the political lobbying for sustaining the wasteful
government support program only helped some greedy politicians.
So the losses outweigh the benefits of government support to sugar industry.
3. What do you think would happen if the U.S government removed all support for U.S
sugar producers?
Answer: Some consequences will happen:
i. Sugar prices will decrease
ii. New jobs will be created
iii. Competition will increase for free market situation
iv. Companies will not offshore outside the country
v. Farmers/ local producers will expand their production
vi. Import may increase
vii. Investment will increase in sugar related industries

5. 4. Government support programs for sugar producers were introduced in the 1930s, yet
they are still in place today, long after the original rationale disappeared. What does this
tell you about political decisions relating to international trade?
Answer: The political decisions were controversial because many observers thought it will be
abandoned for its uneconomical results. The political decisions relating to International trade:
i. Political decisions were influenced by lobbying
ii. The decision is antithesis of free market policy
iii. Politicians thought only for their wellbeing
iv. It is result of conservative ideology
5. If you had the power to make changes here, what would you do, and why?
Answer: If we had the power to make changes, we would reduce the government support
program to a limited or certain level to support both the local producers and Candy companies
along with other sugar related industries.
Because a reduced certain subsidy is important for the local producers as they may not sustain
in the free market situation, as a result sugar can be imported in a required level with the
minimum cost which will save both the production process and employment inside U.S.
We would also adjust the market demand and supply for maintaining consumer benefits with
fair price related to the world rate. We also had to take necessary steps to diminish the political
lobbying so that it could not affect the logical decisions.