The subsidy programme of the government on inland movement of sugar to the ports for exports will be terminated on September 31, 2008. The government has been compensating inland movement in coastal areas to the extent of Rs 1,350 a tonne and Rs 1,450 a tonne for movement of sugar for exports by mills located in the interior. Worlds two major exporters, Australia and Thailand, had threatened to drag India to the WTO dispute settlement body on the issue of sugar export subsidy.
The Union food and agriculture minister, Sharad Pawar on Tuesday convened a meeting of the sugar industry and told them that the government can no longer support their exports beyond September 31, 2008. The minister when contacted said: We are facing some problems regarding our sugar export subsidy in the WTO. I think beyond September 31, 2008, our sugar industry will not need any assistance as the global prices are gradually appreciating.
The director-general of Indian Sugar Mills Association (ISMA), SL Jain, alleged that both Australia and Thailand were guilty of subsidising their sugar sector. Thailand has set up cane and sugar fund (CSF) and according to records 20,286 million baht had been disbursed to cane growers as interest free long-term loan in the 1998-2004. Most of the loan has not yet been recovered, which practically amounts to making direct payments. The then deputy secretary general of Thai Cane and Sugar Board, Nattaphon Nattasomboon at the tenth Asia International Sugar Conference in May 2004 in Kaula Lampur, Malaysia had admitted that the outstanding loan amount was 15,598 million bhat. The loan was extended to growers to keep them in cultivation as they were severely affected due to low prices for both sugar and cane, he said.
Australia is guilty of veiled subsidisation. Although the applied tariffs on raw and refined sugar in Australia have been scaled down to zero since 1997, domestic prices of refined sugar are regulated through a complicated internal mechanism of distribution thereby discouraging imports. About A$ 444 million assistance was approved by the federal and state governments on April 28, 2004 under Sugar Reform Bill.