INDIA’S SUGAR DILEMMA


The Indian government’s dilemma on supporting their farmers while adhering to the rules of the World Trade Organisation.


There has been a seismic shift in global sugar production over the past season. Brazil, for so long the world’s largest sugar producer has been toppled  over as top dog for several years. They are already the largest consumer of sugar in the world and with about 30 million cane farmers; sugar is a very important economic and political commodity.


While sugar consumption across Europe and the US has been hit by health concerns, it has continued to solidly increase across Asia. Whether by design or accident, India being strategically placed     and secondly you give support to your farmers or exporters, or both.


The Indian government cannot be directly held responsible for the current low world prices but their support of their farmers and mills with incentives and price supporting measures have not only exacerbated the over-production problem but has also exercised the wroth of other producers. Brazil and Australia have both requested the World Trade Organisation (WTO) formally initiates a dispute consultation against India. Thailand, the EU, Costa Rica and Guatemala have now requested to be part of the dispute consultation.


So what caused this collective cry of ‘foul’ from the  year, the Indian government approved incentives to encourage (force) mills to export at least 5 million tonnes. These incentives included a transport subsidy of up to about $41 per tonne depending on distance from port. Additionally, the cabinet approved raising the price the government directly pays to cane  Also in September the minimum selling price of sugar  government announced soft loans to sugar mills to help clear cane tax dues arrears. They also increased 


“FROM A GOVERNMENT PERSPECTIVE THERE IS ONLY ONE THING WORSE THAN PRODUCING TOO MUCH SUGAR AND THAT IS NOT PRODUCING ENOUGH.”


6 | ADMISI - The Ghost In The Machine | May/June 2019


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