Canegrowers chairman Paul Schembri has welcomed the Federal Government’s action with the World Trade Organisation. Picture: Peter Wallis
Canegrowers chairman Paul Schembri has welcomed the Federal Government’s action with the World Trade Organisation. Picture: Peter Wallis

Sugar growers initiate WTO action

THE Australian and Brazilian governments are taking India to the World Trade Organisation over allegations it dumped subsidised sugar on the global market, causing a collapse in the commodity's price.

Cane farmers throughout North Queensland are struggling to meet the cost of production because of cheap Indian sugar flooding the market.

Prices have rallied slightly in the past two months but still sit about $400 per tonne.

Growers say about $450 per tonne was usually what was needed to break even.

Trade, Tourism and Investment Minister Simon Birmingham said India's sugar subsidy regime was inconsistent with WTO rules and had helped create a glut in the global sugar market.

"This glut is hurting Australia's canegrowers and millers, and is threatening our $1.8 billion sugar export industry by dragging down prices to unsustainable lows," he said.

"While Australia respects the rights of WTO members to support their farmers and agricultural industries, this support must be consistent with WTO rules and provide a level playing field.

"Australia always seeks to resolve its concerns outside of the WTO's dispute system, and our numerous representations to India at the highest levels and in the WTO have been consistent with this approach."

Senator Birmingham said Australia's representations, and those from other sugar exporting countries had been unsuccessful.

"This has left us with no other choice but to initiate formal WTO dispute action, together with Brazil," he said.

"Australia maintains a very good relationship with India, both economically and strategically, and it is perfectly normal for even close friends and partners to avail themselves of WTO mechanisms from time-to-time to resolve trade issues."

The peak bodies for producers and millers - Canegrowers and the Australian Sugar Milling Council - welcomed the action.

Canegrowers chairman Paul Schembri said a WTO dispute was a rare and significant escalation towards resolving a situation that had been "depressing the global sugar price and the earnings of Australian sugarcane growers and sugar millers".

"We had been hoping the Indian government would come to the table to find a negotiated solution rather than enter the more protracted formal proceedings, but this hasn't happened," he said.

Milling Council chief executive officer David Pietsch said the analysis it jointly developed with government painted a strong case against Indian sugar support mechanisms.

"India's sugar subsidies are a clear breach of its WTO obligations," he said.

In November the WTO Committee for Agriculture met in Geneva with 13 countries supporting the counter-notification lodged by Australia against India. The counter-notification is a precursor to formal action.

Agriculture Minister David Littleproud said the sugar industry relied heavily on exports, with about 80 per cent of its raw sugar being sent overseas.

"These subsidies are hitting our farmers and I'm pleased we're exercising our WTO rights and asking for an even playing field," he said.