INDIAN government price and export subsidies have cost the Queensland sugar industry an estimated $1 billion.
The subsidies, which are currently being investigated by the World Trade Organization, have helped to significantly lower world sugar prices, according to a new report by Green Pool Commodity Specialists.
Leading industry organizations the Australian Sugar Milling Council (ASMC) and CANEGROWERS say the detrimental impact confirms the need for continued Australian government and industry pressure against India’s subsidies .
The report commissioned by the ASMC found that the Indian government’s regulation of sugar cane prices was causing large production surpluses and India’s subsidized exports had contributed to a significant drop in world sugar prices. .
The report concludes that sugar cane growers and sugar mills in Queensland recorded an estimated $1 billion in revenue between 2017-18 and 2020-21, or nearly $5 million a week.
ASMC director of policy, economics and trade, David Rynne, says Australia, Brazil and Guatemala filed a formal complaint over Indian government subsidies at the WTO in February 2019.
A WTO report on the complaint could be released in 2021.
“Over the past four years, these subsidies have harmed growers, millers and workers in Queensland’s sugar industry, their families and their communities,” said Mr Rynne.
“The Green Pool report concluded that India’s current sugar production of over 33 million tonnes exceeds its domestic sugar consumption of around 26 million tonnes.
“This subsidized excess production means that export subsidies will likely be a permanent feature for many years to come if left unchecked.”
The ASMC and CANEGROWERS commended the Australian Government for its advocacy for the sugar industry, calling for continued support for growers, millers, dependent businesses and regional communities.
CANEGROWERS chairman Paul Schembri said the Australian government had strongly supported the industry through the WTO case, but with worrying reports that the Indian government may be considering another set of subsidies to export, it was clear that maintaining the collective effort of our diplomatic representatives to the Indian government will be crucial.
“We hope the WTO will rule against Indian subsidies, as the economic pain for Australian growers, millers and sugar communities could be deep and prolonged if they continue,” Mr Schembri said.
“We will share the findings of this report with the Australian and Queensland governments, as well as our local parliamentary representatives.
“We want to work with them to ensure progress towards a fairer global sugar market.”
The Green Pool report revealed thatby 2017-18, India’s sugar export subsidy program had become virtually institutionalized.
“India is now a structural exporter of sugar, with subsidies on exported sugar of up to a third of the cost of producing raw sugar from an Indian factory,” the report said.
“Apart from export subsidies and regulated sugarcane prices, the Indian government also sets domestic sugar prices well above world prices and provides soft loans to milling companies to build ethanol distillation operations to utilize sugar and processing by-products.
“The Indian government’s decision to financially support significant levels of (initially compulsory) exports has had a real and perverse impact on the global market.”
The ASMC is commissioning further analysis to determine the broader impact of India’s subsidies on Queensland regions and the state’s economy.
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