Camex Board authorizes consultation to question Indian sugar policy

The Camex Council of Ministers authorized the opening of consultations to question India's sugar policy with the support of the Disputes Body of the World Trade Organization (WTO). The request was forwarded by the Ministry of Agriculture, Livestock and Supply with the argument that Indian measures put global sugar trade at risk, as it creates distortions in international prices. The market is going through a critical moment, with global raw sugar stocks high due to excess supply. 

The intention is to question the subsidies given by the Indian government to the country's sugar production, which is also one of the largest in the world. According to Minister Blairo Maggi (Agriculture, Livestock and Supply), the situation harms exports of the Brazilian product, the largest player in the global commodity market and which has also suffered from the safeguard imposed by China in this market.

The Brazilian decision comes after Australia also complained to the WTO that India far exceeded the limits allowed to subsidize the local sugar sector.

According to a Conab survey, Brazilian production in the 2017/2018 harvest was 37,8 million tons of sugar and last year it exported 28,7 million tons, for a total of US$11,4 billion. 
Sugar production projected for the 2018/19 harvest is expected to decline in the main producing countries, including Brazil, which will have a harvest of 8,27 million tons below the previous one.

The drop in production in Brazil will make the country lose its position as the world's largest sugar producer to India, a country that, in 2008/09, was an importer of the product, without significant changes being made to its production chain.

The request for consultation is a preliminary negotiation phase to an investigation by the WTO. If there is no agreement, the Brazilian government may have the right to open a panel with the body, when experts examine the questioned trade conditions.

Since the 1960s, India has implemented a minimum price policy for sugar cane, which aims to protect farmers from fluctuations in the international price of sugar. With support from federal and state laws, the Indian government establishes administered prices that processors must pay to producers for the purchase of sugar cane.

Other support measures for the sector result from this policy, such as, for example, assistance to mill owners via direct transfer of resources to farmers or via subsidized interest. Another measure is the creation and maintenance of a stock of three million tons of sugar for a period of one year with the government reimbursing the costs incurred by sugar mill owners. And also, subsidized loans for plant owners' investments in ethanol production.

Additionally, the Indian government implements export subsidy measures, with the aim of disposing of national overproduction resulting from the minimum price policy for sugar cane. Among these measures, assistance subsidies linked to the export performance of mill owners and transport subsidies to facilitate sugar exports stand out.