Brazilian sugar millers that make almost half the world’s exports are urging India to end a subsidy program on expectation it will cause them to lose as much as $1 billion this year as prices decline.
Sugar, which has plunged 40 percent since early 2011, may drop between 7 percent and 12 percent on average this year because of India’s aid to producers, Leao de Sousa, executive director at Brazilian sugar industry group Unica, said by telephone.
Unica is in talks with Brazil’s government to seek to build a case against the subsidies at the World Trade Organization, Sousa said after Unica posted a joint statement with Australian producers urging the end of India’s program.
“It’s a very worrisome situation because the sugar industry already faces a delicate moment in Brazil due to low sugar prices,” Sousa said. “We’re working to make the government aware of the extent of the problem.”
India, the largest sugar producer after Brazil, is offering to subsidize 4 million metric tons of exports in the next two years and granting interest-free loans to mills to help them pay debt to growers.
The program will cause “downward pressure” on prices and harm other exporting countries, John Pratt, chairman of the Australian Sugar industry Alliance, or ASA, said in the joint statement posted on Unica’s website today.
“The Australian industry joins with Brazil and other world raw sugar exporters in urging India to consider the real economic consequences that its subsidies could have,” ASA said, urging that “India respect the international trade rules.”