Australia has recently threatened that the country will raise international trade actions against India unless the latter drops some subsidies that are paid to its cane farmers. Australia claims that these subsidies have led to a major international sugar glut and have driven sugar prices down in the world market.
Australian Trade Minister Simon Birmingham have brought this issue with the Indian High Commissioner to Australia. Mr. Birmingham said that he also plans to bring this issue with the country's commerce and industry minister.
Mr. Birmingham believes that India has breached some of the established rules when it comes to international trade. He added that he will not hesitate to bring this issue up with other nations should India continue with its stubborn policies.
According to some market analysts, India and Pakistan's subsidy regulations have clearly hurt many sugar growers from all around the world. Many also insist that the two countries stop this unsustainable distortion of market practices in order to stabilize the global sugar market.
Based on the latest data released to the public, global sugar prices have reached a 10-year low in just a span of two years. This decrease in sugar's price has shaved more than $600,000 off of Australia's sugar export industry. Something that has rendered thousands of growers completely unprofitable.
Because of the drop in sugar prices, Australia's $2 billion sugar export industry was reduced to a $1.4 billion industry. This left more than 4,100 growers totally unprofitable. Many observers are also wary that more growers will suffer should trade practices are not remedied.
Aside from Australia, Brazil which is the world's biggest sugar exported is also planning to join the former in seeking a resolution against India and Pakistan's subsidy regulations.
Two years ago, sugar prices hover around $595 a ton. Recently, because of market saturation, sugar's price per ton was reduced to just $294. A rise in market anxieties from sugar growers has risen recently with some of them seriously considering to stop planting should prices continue to deteriorate.
According to analysts, the upcoming Indian general election has prompted those in the Indian government to offer generous subsidies to the sugar farming electorate, a sector composed of more than 50 million voters. Because of this, India's sugar production is expected to rise from 20 million tons to 35 million tons this year with the surplus expected to hit the export market.
On the other hand, Australia which ranks as one of the world's top four exporters of sugar can export up to 3.7 million tons of raw sugar annually.
