Indian sugar subsidies hit local growers as global prices slide

QUEENSLAND sugar cane farmers are being hit by slumping global sugar prices caused by subsidies provided to growers in India and Pakistan.

Mackay canegrower Greg Plath says Indian and Pakistan sugar subsidies are having a big impact on the market.

QUEENSLAND cane farmers are being hit by slumping global sugar prices caused by subsidies provided to growers in India and Pakistan.

Canegrowers Queensland chairman Paul Schembri said sugar prices were now trading at a decade low meaning farmers’ production costs were higher than what they were getting on global markets. Raw sugar prices for October delivery dropped to a low of US10.10¢ (A13.8¢) a pound on Friday.

“We are looking at a global surplus of 20-30 million tonnes of sugar, which is a substantial amount,” Mr Schembri said. “The main problem is the subsidies provided by governments in India and Pakistan. India has gone from producing about 20 million tonnes of sugar five years ago to 30 million tonnes now.”

He said he was concerned about the economic impact of depressed prices on Queensland cane farmers and sugar towns.

“If these low prices are sustained for an extended period, it will cause enormous economic damage,” Mr Schembri said. “Some farmers have taken out forward pricing contracts and that may help but it will quickly run out. Cash flow is being stretched and farmers are having to take on more debt.

“Sugar prices on global markets always ebb and flow, but Australian growers do not receive any subsidies.”

Mackay canegrower Greg Plath said Indian and Pakistan sugar subsidies were having a big impact on the market but they would not last forever.

“Australian canegrowers are price takers so we cannot really do anything,” said Mr Plath. “But there is light at the end of the tunnel.

“A lot of these canegrowers in India and Pakistan are small subsistence farmers and they will plant other crops when the subsidies end.”

A complaint to the World Trade Organisation (WTO) against the subsidies was now being prepared by leading sugar producers including Australia, Brazil and Thailand. “We are just not sitting here and doing nothing about it,” said Mr Schembri. “Back in 2004 we took the European Union to the WTO over similar subsidies and won.”

He said cane growers, who were currently in the middle of harvest season, also were facing challenges in the form of dry conditions throughout most growing areas.

That meant this year’s cane harvest was expected to be slightly below last years’ 33 million tonnes at around 32.5 million tonnes.