Sugar industry: India's subsidy policy destabilizes world market

01-Oct-2018 - Germany

One year after the abolition of the sugar quota in Europe, the world market price for sugar marks a ten-year low. Dr Hans-Jörg Gebhard, Chairman of the Economic Association for Sugar (WVZ), recalls in this context: "The fall in prices on the world market for sugar is largely due to the unfair subsidy practices of the major producer countries. Together with the coupled premiums paid within the EU, they endanger not only further development opportunities but also the continued existence of sugar production in Germany in the long term. This is an equally threatening development for beet growers, sugar manufacturers and all employees in this sector.

According to the WVZ, the current fall in prices on the world market is also attributable to the production and export incentives recently created by the Indian government. So far, the Indian sugar cane mills have been obliged to export at least two million tonnes of their total overproduction of six million tonnes this year. The Indian state is subsidising these exports via the high internal guaranteed prices for sugar cane and cane sugar. This would increase the surplus on the world market. This would lead to a further decline in the world market price. Since the end of the quota these price developments have had an almost unhindered impact on the EU market. "The European Union must take strong action against these distortions of competition," said Dr. Gebhard.

Further distortions of competition to the detriment of German producers are different regulations in the area of crop protection and the coupled premiums for sugar beet cultivation now paid in eleven EU states. Italy recently even increased the area payments for beet cultivation once again. "Coupled premiums are used to preserve uncompetitive structures. This is precisely what the reform of the sugar market regulation should avoid," said Dr. Gebhard. The WVZ therefore calls for the abolition of coupled premiums for sugar beet as part of the forthcoming reform of the European agricultural policy.

In view of the current fall in prices on the world market and the distortions of competition within the EU, the WVZ is calling on the German government to take a more vigorous stance in favour of fair framework conditions. Otherwise, the critical situation in the German sugar industry will continue to worsen.

https://www.yumda.com/en/news/1157680/sugar-industry-india-s-subsidy-policy-destabilizes-world-market.html