The U.S. Sugar Market

[Correction January 18.  I forgot to link the Excel workbook.  Click here to download it.]

High fructose corn syrup (HFC) is widely used as a sweetener in the U.S.^[1] Various strange hypotheses have been advanced about why U.S. businesses do this. Most countries just use plain sugar. The reason is actually pretty obvious once you know something about U.S. sugar policy.  Here’s how the U.S. sugar market works.

Where is sugar used? In Mexico, it’s in Coca-Cola™. But in the U.S. the company uses HFC. Don’t think of sugar as something you sprinkle on that bowl of cereal. Sweeteners pervade food. Where possible, food producers will use HFC instead of sugar.

Before delving into the data, here’s an excerpt from Carl Hiaasen’s “Striptease”^[2]:

(click for larger image)

Elsewhere in the book, Mr. Hiaasen says it’s impossible to be elected to the U.S. Congress from Florida without support of the sugar lobby. (Mr. Hiaasen has been a columnist for the Miami Herald for decades. He knows the state.)

Back to Economics

Now that the fun is out of the way, let’s look at some numbers.

The U.S. imposes a tariff rate quota (TRQ) on sugar imports. This system imposes a relatively low tariff on the first N units of a product imported. Above N the tariff is increased, often to a punitive level. In effect, N units is a quota on import quantities.

For sugar, the TRQ is described by the USDA Economic Research Service.^[3]

The United States negotiated sugar TRQs as part of the Uruguay Round Agreement on Agriculture (AoA). These are also called World Trade Organization (WTO) TRQs. In the AoA, the United States agreed to provide access for not less than 1,117,195 metric tons raw value (MTRV) for raw sugar, and 22,000 MTRV for refined sugar. As provided for in the Harmonized Tariff Schedule of the United States (Ch.17, Additional U.S. Note 5 (a) (ii)), whenever the Secretary believes that domestic supplies of sugars may be inadequate to meet domestic demand at reasonable prices, the Secretary may increase the raw or refined WTO TRQs.
…
The basic in-quota tariff is 1.4606 cents per kilogram (0.663 cents per pound) for raw sugar and 3.6606 cents per kilogram (1.660 cents per pound) for refined sugar. Most countries qualify for an exemption from these tariffs under either the Generalized System of Preferences (GSP) program, which requires periodic renewal by Congress, or under a free trade agreement, which provides a permanent waiver. The out-of-quota tariff is 33.87 cents per kilogram (15.36 cents per pound) for raw sugar, and 35.74 cents per kilogram (16.21 cents per pound) for refined sugar. In addition to the out-of-quota tariffs, there are safeguard duties based on the value or quantity of the imported sugar. The quantity safeguard duties are not applicable unless specifically announced by the Secretary and expire at the end of the year in which they were implemented. For each item, the price safeguard duty is in effect whenever the quantity safeguard duty is not in effect.

The tier 1 tariff ($0.01660 per pound) may seem small – at least until you look at the world price of sugar. In 2024, that was $0.208 per pound for raw sugar. The out-of-quota tariff ($0.1621 per pound) is pretty hefty. By contrast, the U.S. domestic price was a cool $0.383 per pound. That means the U.S. price was 1.84 times the world price. ^[4]

So here’s the bottom line:

(click for larger image)

(click for larger image)

What’s the impact on U.S. sugar production? In December 2024 domestic production was 9.3 million short tons.^[5] Imports were 3.8 million tons. (Unbelievably, the U.S. exported 0.249 tons.) The TRQ system keeps the domestic price of sugar far above the global price. The result is a bonanza for U.S. sugar growers (cane and beet). Here’s the data for December. 2024.^[6]

US Sugar Sources and Uses 2024 (click for larger image)

Prices of HFC and Sugar

For comparison purposes, I’ll use the wholesale price. But how do we compare the two on an equal basis? Luckily, the food science people are all over this:^[7]

Fructose is the sweetest naturally occurring carbohydrate and is 1.2–1.8 times sweeter than sucrose (table sugar).

So we can compare the two on a “per unit of sweetness” basis. (Sugar’s sweetness is 1.0.)

INVERTOSE is a major HFC producer. They sell 55-gallon drums of HFC for $561.40.^[8] A drum weighs 620 pounds. That’s $0.91 per pound For a sweetness of 1.2, that’s $0.75 per sweetness unit. At 1.8 it’s $0.50 per unit.

BakersAuthority sells wholesale sugar. A 50 pound bag costs $100.40 or $2.01 per pound.^[9] That, of course, is $2.01 per sweetness unit. Sugar is simply not competitive.^[10]

Conclusion

When a best-selling novelist and economics agree, it’s best not to argue. Tariffs raise domestic prices, lower domestic quantity demanded, and destroy consumer welfare. But, for sugar, the payoff to sugar producers and politicians is what matters.

1. “What is Fructose?” https://foodinsight.org/what-is-fructose/# Accessed July 5, 2025. ↑
2. ISBN-13: 9780525431770, Knopf Doubleday Publishing Group, 08/04/2020 ↑
3. USDA Economic Research Service “Table 25–U.S. monthly estimates of sugar supply and use, by fiscal year, since fiscal year 2003” Direct download link https://ers.usda.gov/sites/default/files/_laserfiche/DataFiles/53304/Group%202%20Tables%20-%20World%20US%20and%20Mexican%20Sugar%20and%20Corn%20Sweetener%20Prices.xlsx?v=33754 Accessed January 15, 2024. ↑
4. USDA “Sugar and Sweeteners Yearbook Tables” World, U.S., and Mexican sugar and corn sweetener prices. https://www.ers.usda.gov/topics/crops/sugar-and-sweeteners/policy Direct download link https://ers.usda.gov/sites/default/files/_laserfiche/DataFiles/53304/Group%202%20Tables%20-%20World%20US%20and%20Mexican%20Sugar%20and%20Corn%20Sweetener%20Prices.xlsx?v=28608 Accessed January 15, 2025. ↑
5. A “short ton” is 2,000 pounds. Henceforth, I’ll use “ton.” ↑
6. USDA Economic Research Service Sugar and Sweeteners Yearbook Tables “Table 25–U.S. monthly estimates of sugar supply and use, by fiscal year, since fiscal year 2003” ↑
7. “What is Fructose?” https://foodinsight.org/what-is-fructose/# Accessed July 5, 2025. ↑
8. https://www.chemcentral.com/invertose-high-fructose-corn-syrup-026430-42-fructose-food-grade-55-gal-drum-16152570.html?gad_source=1&gbraid=0AAAAACbMa-i7imhzrw-kMjn2jCgiJLZQg&gclid=CjwKCAiA-Oi7BhA1EiwA2rIu23r9pqB3IXiL6a_JCrsT8CSFbtQgOoDscc32PrxG9FmRGx97BuXevhoC8oMQAvD_BwE Accessed January 7, 2025. ↑
9. This is the U.S. wholesale price including the effects of the tariff. ↑
10. The world wholesale price should be about half the U.S. price, $1 per pound. Even at this price, HFC is still more cost-effective. ↑