EFFICIENCY LOSSES AS A RESULT OF INSUFFICIENT STRUCTURAL ADJUSTMENTS DUE TO THE EC SUGAR REGIME - THE CASE OF GERMANY

Comparison of the current structure with an optimal structure of the German sugar sector indicates large potential for efficiency gains. Imposition of EC sugar quotas at the firm level created inefficiencies that have been maintained by the design of the EC sugar regime which hinders an adjustment to the long term optimum. As a result of simultaneous examination of regional beet supply functions, transportation and processing costs, total efficiency losses amount to more than 20 per cent of current production cost of sugar. Welfare losses of this extent accrue as benefits to a small pressure group and could be reduced if quotas are eliminated or made tradeable.