Protectionist policies are usually established by lobbyists of some minority who want to protect themselves. ... The feds should comply because protectionism benefits the nation as a whole.
Nonsense. And branded as such my almost all economists as they understand the benfits of free trade. Read at least the summary below.
Unfortunately, I cannot view adoucette´s price graph* but from Page 5 of Hersey´s Annaul report to SEC for year ending 31Dec11, I read:
“The price of sugar is subject to price supports under U.S. farm legislation. This legislation establishes import quotas and duties to support the price of sugar. As a result, sugar prices paid by users in the U.S. are currently substantially higher than prices on the world sugar market. In 2011, sugar supplies in the U.S. were negatively impacted by government import restrictions, strong demand and high world market prices. As a result, refined sugar prices increased significantly compared to 2010,
trading in a range from $0.57 to $0.64 per Pound” is this about what your graph states?
*It seems my ISP is removing from all data streams coming to me everything between [ img]....[/img] to cope with their inadequate capacity. Until a few days ago, they used “rolling blackout” and then I would do something else when my part of their “service” area was not being served.
On page 8 I read: “The percentage of total consolidated net sales for our businesses outside of the United States was 15.6% for 2011, 14.6% for 2010 and 14.3% for 2009.” I.e. Hersey is growing faster outside of US than in the US. They built their large producton plant in São Roquo, SP, Brazil in 2002. I don´t think it is yet exporting back to the US as the Brazilian population demand for Hersey products is still rapidly growing, but at some point in time they will as production here is cheaper than in the US.
Note to Carcano: Perhaps in a decade or so when Hersey is either bought by Nestle (or another chocolate producer with lower costs) or simply ceases to make chocolate in PA and imports it instead from its non-US plants with sales growing more than twice as fast as the US plant, you will understand the damage sugar tarriffs & quotas have done to the US economy, especially the already ocurring loss of jobs. (Hersey has closed some US plants already.)
On page 13: “As part of our global growth strategy,
we are increasing our investments outside of the United States, particularly in Mexico, Brazil, India and China. …”
On page 23: “Net sales in the U.S. increased approximately 5.9% compared with 2010, with essentially equal contribution from net price realization and sales volume gains. Net sales for our businesses outside of the U.S. increased approximately 14.5% in 2011 compared with 2010, reflecting sales volume increases and net price realization, particularly for our focus markets in Mexico, Brazil, China and India…” Surely much of this greater than twice the Ex-US growth rate is due to fact all these markets have middle classes rapidly expanding and growing wealther, in contrast to the converse in the USA.
Interestingly, on page 15 they list their properties: four manufacturing facilities in the US, and the one in Monterrey, Mexico, but not the one in São Roquo, Brazil. The Mexican plant replaced the plant of their first move out of the US (a plant in Ontario Canada) and one, now closed, in Oakdale, California:
“{Hersey}opened on June 15, 1963 in Smiths Falls, Ontario, Canada and the third opened on May 22, 1965 in Oakdale, California.[13][dead link] In February and April 2007 Hershey's announced that their Smiths Falls[14][15] and Oakdale[16][17] plants would close in 2008, being replaced in part by a new facility in Monterrey, Mexico. The Oakdale factory closed on February 1, 2008.[18] Hershey chocolate factory in São Roque, Brazil was opened in August 2002. …”
From:
http://en.wikipedia.org/wiki/The_Hershey_Company
SUMMARY: (and why important to understand that sugar quotas and tariffs damage the US ): In general it is ALWAYS to the long term advantage to the societies of both trading partners, IF the trades are based on real / natural economic and not some government protection or subsidy program. Likewise the converse is true: Government protection of domestic producers with higher cost of production is ALWAYS is a net long term loss / cost to the society “protected.” This is why the WTO has strong rules limiting the use of trade barriers to short term periods. Nearly every economist, with no vested interest in some tariff and/or quota protected industy agrees with the WTO position.
Sugar quotas and protective tariff are no exception to this general rule: I.e. the net effect is to hurt Americans and the US economy. Free trade is ALWAYS best, but in must be free of government distortions and based on natural differential production cost advantages. The US should not be producing sugar any more than it should be producing coffee as both have lower natural production costs elsewhere.
If the tariff walls and quotas were removed, the land now growing sugar beats would be producing soy beans (or other cost effective crop). With soy, the US is cost competive without subsidies - Soy is a major export of the US, with long term rising prices. It helps the balance of payments but the tariff & quotas hurt the balance of payments as US imports, more cheaper to make, foreign chocolate.
