AUSTRALIAN cane farmers are reeling after the Indian government today approved an export subsidy equal to a staggering A$216/tonne.
The unprecedented subsidy is designed enable India to export more than 6 million tonnes of sugar over the next year, a move which will flood global markets.
Australian Sugar Milling Council chief executive officer David Pietsch said he was stunned by the $1.3 billion development, which comes just days after the World Trade Organisation launched an investigation into the legality of India's sugar subsidies.
"India's government has approved a massive market distortion," Mr Pietsch said.
"The amount of sugar involved dwarfs Australia's total annual raw sugar exports of 3.6 million tonnes."
CANEGROWERS chairman Paul Schembri said the adverse impact of India's subsidy announcement would be felt around the world.
"This decision by India underlines the vital importance of the WTO process the Australian Government is undertaking with full industry support," Mr Schembri said.
"We urge those involved to take every opportunity and move as fast as they can to expedite this process.
"The low value of sugar on the world market is weighing heavily on the mood of the industry and particularly on growers and their future plans."
Mr Pietsch said Australia was one of the most efficient and lowest-cost producers of raw sugar in the world, but was struggling to survive an extended period of below-cost returns.
"Rather than this attempt to offload raw sugar on an already over-supplied world market, we urge the Indian government to consider alternative solutions, including long-term storage within country and a commitment to reform of its domestic subsidy measures that have contributed to the global sugar glut," Mr Pietsch said.
"This would ease the pressure on both India's domestic price and the world sugar price. It would also be seen as a constructive response to the legitimate concerns raised in the WTO by the Australian, Brazilian and Guatemalan governments.
"The Indian Government's flagrant actions will be subject to an exhaustive and lengthy WTO Panel dispute resolution process."
It is estimated India's raw sugar production will be about 29-30.5 million tonnes in 2019/20 - down from a peak of 33mt in 2018/19.
India's domestic raw sugar consumption is about 26 to 27.5 million tonnes. Some 14mt of raw sugar in held in storage.
