SAO PAULO, Feb. 7, 2014 /PRNewswire/ -- The Brazilian Sugarcane Industry Association (UNICA) has expressed grave concerns about news reports indicating that the Government of India, the second largest sugar producer in the world, intends to announce an increase in sugar export subsidies. If confirmed, the new US$ 128 million subsidizing 4 million tons in raw sugar exports, would come in addition to US$ 120 million already spent by India, considering just the last four sugarcane harvests, to subsidize freight and transportation costs, both to domestic and export markets.
UNICA President Elizabeth Farina points out that all forms of export subsidies are considered illegal by the World Trade Organization (WTO) because of their widely recognized negative impacts on global commerce. "India, however, has been making use of sugar export subsidies for several years, further distorting the global sugar trade," she said.
Both types of subsidy adopted by India are harmful according to the WTO because they not only distort international markets but also artificially force down prices, punishing exporters that don't resort to similar practices. This is the case with Brazil, currently the world's number-one sugar exporter, accounting for about 50% of all the sugar traded around the globe.
"By subsidizing exports, India reduces its domestic sugar stocks and helps local producers by propping up internal prices above global levels. But that forces sugar producers in countries like Thailand, Australia, Colombia, Guatemala and Brazil to reduce their own output and adjust exports in future harvests, or face even deeper losses because of depressed prices," stressed Farina, recalling that over the last two years, global sugar prices have dropped about 50%.
India is the only developing country in the world to adopt sugar export subsidies, which runs counter to positions usually defended by emerging countries at the OMC, consistently against such practices. The world's top sugar producer, Brazil has a long tradition of defending global agricultural trade that's free from all forms of distortive subsidies. In 2013, sugar was the fifth item on the Brazilian export agenda, generating US$ 12 billion in revenues.
The Brazilian Sugarcane Industry Association (UNICA) represents the top producers of sugar and ethanol in the country's South-Central region, especially in the state of Sao Paulo, which accounts for about 60% of the country's sugarcane harvest and more than half of total ethanol production. UNICA develops position papers, statistics and specific research in support of Brazil's sugar, ethanol and bioelectricity sectors. In the 2013/2014 harvest season, Brazil produced an estimated 595 million metric tons of sugarcane, which yielded 34 million tons of sugar and 25 billion liters of ethanol, making it the number-one sugarcane grower and sugar producer in the world as well as the second-largest ethanol producer on the planet.
SOURCE Brazilian Sugarcane Industry Association (UNICA)