The Sugar Industry's Structure, Pricing, and Performance

The structure, pricing, and performance of the U.S. sugar industry were studied with special emphasis on the industry's performance during the recent years of economic stress. The major causes of high U.S. sugar prices in 1974 were tight world sugar supplies and high world sugar prices. In 1974, as in most years, the United States imported about half its sugar. Above the supportive limits of the U.S. Sugar Act, world and U.S. price changes were closely correlated either when rising or declining. So, supply changes in the world sugar market had a major impact on the U.S. sugar industry and on U.S. consumers. In addition to outlining some of the major causes for high sugar prices in 1974, the study focused on the structure of the sugar industry, price movements, price analysis, performance of the industry, and outlook for the future. The beet processing and cane refining industry was found to be one of the more concentrated U.S. industries. And although concentration provides economies of size and improved industry performance, firms could maximize their returns by differentiating between markets, which would be consistent with discriminatory pricing practices. The basing point system of sugar pricing was also discussed--certain firms tended to be price leaders and others followers.