Sinking sugar price: Governments urged to act

Governments urged to act on sugar prices

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A glut of government-supported sugar from Pakistan, and the threat of subsidised Indian sugar exports, has hit global sugar prices hard.

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Subsidies in Pakistan and India have encouraged canegrowers to increase production with no regard to market demand. - David Rynne, Australian Sugar Milling Council.

AUSTRALIA is among a numbers of countries calling for Pakistan, India and the European Union to eliminate subsidies that have created a glut of sugar and caused a collapse in world prices.

RECORD FALLS: A glut of government-supported sugar from Pakistan, and the threat of subsidised Indian sugar exports, has hit global sugar prices hard.

RECORD FALLS: A glut of government-supported sugar from Pakistan, and the threat of subsidised Indian sugar exports, has hit global sugar prices hard.

Meeting in Geneva, the Global Sugar Alliance said the subsidies provided and proposed by Pakistan, India and the European Union contravened World Trade Organisation rules.

Global Sugar Alliance chairman Greg Beashel of Australia said fuelled by a glut of government-supported sugar from Pakistan, and the threat of subsidised Indian sugar exports, the world sugar price (ICE #11) has dropped to a level below the cost of production of even the most efficient producers in the world.

Australian Sugar Milling Council director of trade and economics, David Rynne, agreed subsidised sugar production was having a detrimental effect on global sugar prices. 

“Subsidies in Pakistan and India have encouraged canegrowers to increase production with no regard to market demand,” Mr Rynne said. 

“Ideal growing conditions have resulted in a glut of sugar that is now looming large over international sugar markets. Prices have dropped to levels not seen since the early 2000s.

“With other members of the Global Sugar Alliance, Australia’s sugar industry is calling out the behaviour of the Indian and Pakistani governments, who are likely acting in breach of their WTO obligations.

“The official process takes time, but this week is a necessary collective push to highlight the urgent need for structural reform in the subcontinent.”

Global Sugar Alliance members were resolute in their call on their governments to take action before the market is driven to new lows.

Canadian Sugar Institute president Sandra Marsden said subsidy-induced sugar production surpluses had undone the sugar program reforms implemented by the European Union, returning sugar inventories and exports to the record levels that prevailed historically when sugar production and exports were unfettered. 

Eduardo de Sousa from Brazil’s UNICA said there must be no exports of the subsidised sugar. 

“Global Sugar Alliance Members have identified export subsidies and domestic price supports in excess of WTO allowances and are urging our governments to take all necessary steps to ensure the Pakistan and India comply with WTO rules,” Mr de Sousa said.

Vibul Panitvong, Thai Sugar Millers Corporation, said in the spirit of the decision taken at the Nairobi WTO Ministerial meeting to end export subsidies, Global Sugar Alliance members called on the Pakistani and Indian Prime Ministers to commit unequivocally to the elimination of sugar export subsidies.

The Global Sugar Alliance urges the countries to commit to a reform agenda that removes trade distorting government assistance.

According to the alliance the rules-based multilateral trading system has contributed significantly to global economic dynamism and growth over the past 23 years, and for decades before. The World Trade Organisation’s (WTO’s) rule setting, monitoring and dispute settlement functions deliver real benefits to the world economy, generating employment, raising living standards and lifting people from poverty, it says. 

Global Sugar Alliance members say they are committed to supporting the effectiveness of the WTO, strengthening its rules and enforcing existing rights.

The alliance brings together countries responsible for 85 per cent of the world cane sugar exports. Its members are: Australia, Brazil, Canada, Chile, Colombia, Guatemala, South Africa and Thailand.

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