Government Intervention
Japan does not export sugar, but as a major consumer and importer, its subsidies play a role in distorting the world dump market.
Inefficient Japanese sugar producers are kept afloat by the highest sugar prices in the world. Retail sugar prices in 2004 were 80% higher than U.S. prices, and wholesale prices paid by industrial sugar users were more than double U.S. levels.
The country's Ministry of Agriculture and its Agriculture and Livestock Industries Corporation (ALIC), a quasi-governmental body, oversee the industry and filter subsidies to it.
The government supports sugar farmers by setting a minimum price for their sugarbeets and sugarcane, support prices that are very high by international standards. The subsidy equivalent of this scheme is estimated at $610 million.
Processors are required to pay these high prices to beet and cane producers. In return, subsidies are passed to sugar processors through the ALIC. ALIC buys sugar at high prices from processors then sells it back to them at much lower prices for resale.
ALIC also limits imports to ensure that they do not threaten high domestic prices. Importers must sell sugar to the ALIC at low prices; the ALIC then resells the sugar to the same importers at a much higher price. The difference acts in the same way as a high tariff.
Japan 's WTO-allowed sugar import tariff is one of the highest in the world at 354%.
Sugar imports are further limited by foreign producers having to meet strict quality standards.
Production and Price
Japan produces 900,000 metric tons of sugar a year, not nearly enough to meet domestic demand. It imports 1.4 million tons a year.
Unlike the United States, which allows the 41 countries benefiting from its tariff rate quota to sell sugar at the U.S. domestic price, Japan imports its sugar from a handful of countries at low world dump prices.
Grocery shoppers in Japan paid 77 cents for a pound of sugar in 2004, more than double the 33-cents-per-pound world average retail price.
Food manufacturers and other industrial sugar users in Japan paid 58 cents per pound in 2004, nearly triple the world average wholesale price of 22 cents per pound.
Trade with America
Like the United States, Japan is a net sugar importer. It ships no sugar to America.
|
