Two-and-a-half years after lodging a complaint to the World Trade Organisation (WTO) against India, Australian sugar cane growers will finally have their concerns heard in the international court.

The formal dispute against India was initiated by the Australian, Brazilian and Guatemalan governments in 2018, saying subsidies for Indian cane farmers caused a glut in the international market and led to a significant drop in global prices.

Paul Schembri, chair of Queensland and Australian Canegrowers associations, said it was a relief the hearings were finally going ahead.

“It’s a frustrating process for Queensland farmers, but we can hopefully see light at the end of the tunnel,” he said.

It is a process other industries will be following closely, as Australia prepares to escalate action against China to the WTO over barley tariffs.

In a statement, the Global Sugar Alliance, which represents 85 per cent of the world’s cane sugar exporters, said it had met and reaffirmed its full support “to remove India’s export subsidies and trade-distorting price supports”.

Australian canegrowers and the Federal Government made the initial complaint, which has gone through formal discussions and mediation.

“We think it’s a blatant breach of WTO rules,” Mr Schembri said.

“Those subsidies have destroyed the world price. For Australian producers, who are highly exposed to world prices, it’s costing us something like $300 million or $400 million a year in lost opportunities and income.”

Decision ‘hopefully’ in early 2021

Formal hearings are usually held in person in Geneva, but due to COVID-19 they will be moved online.

The hearings were initially due to be held in May but were postponed because of the pandemic and have been rescheduled for a few weeks’ time.

“They’ll be undertaken by a virtual format, and that gives us some hope now in Australia that we can get a decision possibly in 2021,” Mr Schembri said.

This is not the first time sugar subsidies have been in front of the WTO, with the European Union’s supports declared illegal in 2004.

A cane harvester cutting sugar cane in the afternoon sun.
Queensland’s cane crush is coming to an end for the year.(ABC Wide Bay: Brad Marsellos)

Mr Schembri hopes to see similar results this time around.

“That result came down in favour of Australia and immediately the world price increased very substantially,” he said.

“For a period of five to 10 years we had a strong growth in those world prices.”

Australian cane farms rely on the global raw sugar prices to drive profit, with about 85 per cent of domestic production exported.

With the global price of sugar often below the cost of production, Mr Schembri said he was hopeful the hearings would lead to long-term change.

“We’re hoping if a decision comes down, we’ll get a turnaround in the world price and that this is sustainable, and that going forward, we can have continuous access to world prices that reflect the cost of efficient producers.”

Alternative solutions

Rather than introducing excess sugar onto the global market, the Global Sugar Alliance has called on India to use its product to develop an ethanol industry.

In a statement, the executive director of the Brazilian Sugarcane Industry Association, Eduardo Leão de Sousa, said his country was working closely with India.

“This biofuel will help to improve air quality in India’s major cities, reduce the country’s greenhouse gas emissions and reduce India’s reliance on imported oil,” Mr de Sousa said.

It is a solution Mr Schembri would also like to see.

“Historically, 93 per cent of decisions ultimately are complied with; we’re hoping India will obviously acknowledge, to stop funding these subsidies or direct surplus sugar into something else such as ethanol,” he said.

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