Australia ramps up opposition to India's sugar subsidies

Australia ramps up opposition to India's sugar subsidies


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Canegrowers, millers are struggling in a depressed global market as India's export subsidies lower prices.

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Australia has escalated its campaign against what it claims are illegal Indian sugar subsidies, after negotiations between the major producing nations failed.

Brazil, Guatemala and Australia have lodged a joint request for the World Trade Organisation to resolve their complaint that the subsidies breach WTO regulations artificially depress the global market.

India extended $1 billion of financial support to its canegrowers last year, pushing the global price to a 10-year low of US 9.83 cents a pound in September.

India's production rose in excess of domestic consumption. Exports ensued and global prices are expected to remain depressed on the back of the increased supply.

The current global price is still depressed at US12.38c/lb.

Trade Minister Simon Birmingham said India had not responded to ongoing requests to remove support for its growers.

"India has not taken concrete action to respond to Australia's long-held concerns and continues to provide subsidies in breach of its WTO commitments," Mr Birmingham said.

"The longer these unfair subsidies continue, the greater the impact will be on our hardworking Australian canegrowers and millers and the regional jobs they create."

Agriculture Minister Bridget McKenzie said Australia would do "everything we can" for the local industry.

"This is about protecting over 40,000 jobs and the regional communities that are supported by our sugar industry," Ms McKenzie said.

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Australia lodged a dispute resolution with the WTO in February.

The panel process the government announced today could take 12 months to deliver a definitive ruling.

The sugar industry welcomed the government's move.

"Australia's sugar industry is under pressure, with global raw sugar price stuck at levels well below the cost of production," said Australian Sugar Milling Council chief executive David Pietsch.

Australian Sugar Milling Council chief executive David Pietsch

Australian Sugar Milling Council chief executive David Pietsch

"Our immediate concerns are the ongoing risks of continued low prices and subsidised Indian exports displacing Australian sugar in our traditional markets like Indonesia."

"Trade Minister Birmingham is ramping up the pressure. This is positive news," said Canegrowers chairman Paul Schembri.

"WTO rules are of little use if they are not enforced. We applaud Australia, Brazil and Guatemala taking this action, standing up for our efficient sugarcane industries. It is important that the WTO Panel now be established quickly and the process run expeditiously", said Mr Schembri.

Sugarcane supports more than 4000 cane growing businesses across Australia. The industry also employs about 16,000 people across the growing, harvesting, milling and transport sectors.

India's subsidies are a political fix for its sugar sector.

In early 2018 the government set a floor price for cane, and farmers' output shot up from an annual average of 20mt a year to more than 30mt.

This plunged the customers of growers, the sugar mills, deep into debt.

Unpaid dues to farmers by sugar millers hit $4m in May, which is a significant sum considering 85 per cent of farmers own less than 2 hectares of land and earn $1500 a year.

To help millers, transport subsidies are available to millers further than 100 kilometres from the coast - to encourage them to cart cane for export.

The government also subsidises millers per tonne of processed cane, with payments going directly to farmers with unpaid dues.

The story Australia ramps up opposition to India's sugar subsidies first appeared on Farm Online.

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