Sugar Quotas and Crop Production Efficiency
2002
Bjerre, Markus | Jensen, Jorgen Dejgaard
The paper deals with problems concerning the current sugar policy within the Common Agricultural Policy, especially the efficiency losses due to the combination of high prices and quota on subsidised sugar production. Based on a simple econometric model, the total economic costs of the current policy setting, compared with an unregulated setting, are estimated to be in the area of 20 per cent of the total sugar production, valued at world market prices. Of these costs, some 10 per cent are due to inefficiency in the crop production, as the opportunity costs of land are not taken into account because the sugar price support within the quota overrules these opportunity costs. However, according to the estimates obtained in the present study, the main economic gains by reducing the internal prices are to be found in terms of reduced
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