Threat of further Indian subsidies weighs on sugar price

Threat of further Indian subsidies weighs on sugar price

Media Statement
30 November 2020


The Global Sugar Alliance has called on India to drop its controversial sugar subsidies, adhere to international trade rules, and meet the obligations and commitments it has made as part of its membership of the World Trade Organisation (WTO).

The Global Sugar Alliance, which represents 85% of the world’s cane sugar exporters, believes the world sugar market does not need India’s threat of another round of sugar subsidies, which continue to depress the world sugar price, imposing an enormous cost on the world’s most efficient sugar producers.

Global Sugar Alliance Chairman and Queensland Sugar Limited (QSL) Managing Director, Greg Beashel said Global Sugar Alliance members are fair traders who abide by their WTO obligations and as a respected country with its own high standards, they expect India to do the same.

“As demonstrated 15 years ago, after the removal of European Union sugar export subsidies, world sugar prices quickly rise towards fair value when export subsidies are removed. The same will occur when India abandons its sugar subsidy program,” Mr Beashel said.

Global Sugar Alliance members have met and reaffirmed their full support of the case Australia, Brazil and Guatemala have taken in the WTO to remove India’s export subsidies and trade-distorting domestic price supports which violate India’s commitments to the world community.

“One factor underpinning the recent strength of sugar prices has been the delay in India’s subsidy announcement,” Mr Beashel said.

“Without subsidies world prices need to rise to a level that would allow India to export commercially and fairly. We would welcome India’s subsidy-free participation in the world market.”

News that WTO processes are recommencing after significant COVID-19 interruptions is welcome. Now looking forward to a swift resolution of the case that Australia, Brazil and Guatemala have taken in the WTO, the Global Sugar Alliance calls on India to consider alternative, non-trade-distorting solutions to deal with its subsidised surplus sugar production, such as hastening the development of its ethanol market.

Executive Director of The Brazilian Sugarcane Industry Association (UNICA), Eduardo Leão de Sousa said Brazil had been working closely with India, exchanging ideas and technology to contribute to the development of an Indian ethanol industry, based on Brazil’s almost 50-year experience using ethanol as fuel on a large scale.

“This biofuel will help to improve air quality in India’s major cities, reduce the country´s greenhouse gas emissions and reduce India’s reliance on imported oil,” he said.

“Moreover, it will offer India a strong, viable outlet for its surplus sugarcane, providing a market solution for its sugar industry and cane growers, without adversely affecting the national and international sugar markets.”

Leopoldo Bolaños, International Trader, Guatemalan Sugar Association said Improved trading conditions are in everyone’s interests. We encourage India to comply with its WTO commitments.

Sandra Marsden, President, Canadian Sugar Institute India’s sugar supports have set agricultural trade reform back, at a time when the world economy is struggling under the weight of increased protectionism. It is in all of our interests that these supports, along with other distorting measures in the world sugar market, are removed.

Vibul Panitvong, Chairman of the Executive Board, Thai Sugar Millers Corporation said all Global Sugar Alliance members are urging our governments to work together as a matter of urgency to solve the India sugar dispute and strengthen the world sugar trade.

Mr Beashel said the Global Sugar Alliance’s priority was to secure a world in which sugar could be traded freely across regional and global markets.
“Eliminating India’s export sugar subsidies and complying with its international obligations will be a good place to start,” he said.

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