The global sugar community chastised India when it announced export subsidies last year that seem to be in clear violation of WTO rules. Those subsidies, which were set at $53 a ton in February and increased to $54 a ton later in the year, helped the country offload 2.8 million tons onto the already depressed global market in 2014.
India responded to the international criticism by upping the subsidy to $64 a ton in 2015.
And India’s sugar industry responded to the big subsidy boost…by criticizing the government for taking too long to write the latest bailout check.
A Feb. 24 Reuters article quoted one commodity trading company in India saying:
“We have nearly missed the bus as the government took a long time to approve the subsidy. There is plenty of sugar and supplies from Brazil will arrive in April.”
Apparently, India’s special interests are mad that their heavily subsidized product may have fewer buyers because Brazil’s heavily subsidized sugar will hit the market before theirs.
So how should a market-manipulating, government-run system respond to criticism at home? The same way it responds to criticism abroad: with more subsidies, of course.
According to the same Reuters article:
“To help mills, India’s top sugar-producing state of Maharashtra is considering an extra 1,000 rupees ($16) per tonne subsidy for exports of raw sugar.
“Maharashtra, which accounts for more than a third of India’s sugar production, is likely to approve the incentive in a week, said a government source who declined to be named as he is not authorised to talk to the media.”
The new state-based subsidy was officially approved last week, according to an article by an Indian news site, Daily News and Analysis. One happy farmer explained to the outlet, “The excessive sugar can be exported [and] farmers will get good rates by exporting it.”
Of course with a combined subsidy of $80 a ton, it’s hard not to get a good rate for exporting. And it’s hard not to depress prices for everyone else in the world.
These stories, and dozens more like them chronicling the massive run-up in global sugar subsidies, can be found on a new web page recently unveiled by the American Sugar Alliance (ASA).
ASA posted the site as part of its campaign to eradicate market distorting sugar policies around the world so that a free market can form.