Farmers cop caning

Surplus pushes prices below cost of production

THE rough ride for the North’s sugar growers is set to continue.

Farmers this year and most likely next year will sell their cane for less than it costs them to grow.

Tom McNeill, a director and analyst at commodity firm Green Pool in Brisbane, said the October sugar trading price was set at $ 330 a tonne.

He said the break- even price on the cost of producing a tonne of refined or raw sugar was about $ 400 a tonne.

Mr McNeill sees no immediate relief in sight.

The sugar trading price yesterday was $ 350 a tonne for March 2019 and $ 354 tonne for May 2019.

He said farmers and millers would all be affected by the low price.

“These levels are significantly below the cost of production for Australian producers,” Mr McNeill said.

He said the 19 million tonne sugar surplus was the largest in history. He said the bulk of the surplus was coming from India.

“India has gone from producing 20.2 million tonnes of sugar to 32.5 million tonnes,” he said.

He said a further “significant surplus” was expected for the 2018- 19 season.

“It may be some time before the market can move back into deficit and clear the existing very high stock levels,” he said.

Paul Schembri is the chair- man of the sugar industry’s peak growing body, Canegrowers Queensland.

He blames the sub- par price on the rampant overproduction in India and Pakistan, boosted chiefly by the government- backed treasuries of both countries.

He said overproduction has led to the massive 19 million tonne sugar surplus now flooding global markets.

Mr Schembri said representatives from Australia, Brazil and Thailand – three of the world’s leading sugar exporters – were meeting in Ge- neva this week as part of a process to convince the World Trade Organisation to clamp down on India and Pakistan.

Both India and Pakistan are members of the WTO and are required to come to heel when directed.

Mr Schembri said the process of ending the government- backed subsidies in Pakistan and India would be protracted.

“It will involve economic assessments and there are also matters of diplomacy,” he said.

Mr Schembri said the government subsidies were being implemented via transport arrangements. He said the subsidies would not be an issue if they were limited to domestic marketing arrangements in India and Pakistan.

He said the subsidies did, however, become an issue when they extended to exports and provided both India and Pakistan with an unfair advantage over other exporters including Australia, Brazil and Thailand.

Mr Schembri said there was a likelihood that the downward price would stay in play for next year.

But, at the same time, he would not rule out a random weather event or something else happening that severely depleted production opportunities in one or more sugar growing countries.

He said this year’s Queensland crop estimate of 32,500,000 tonnes of cane was down on previous years.

He said this was the result of flooding in North Queensland earlier this year and drier than normal growing conditions in the central coastal regions.

THESE LEVELS ARE SIGNIFICANTLY BELOW THE COST OF PRODUCTION FOR AUSTRALIAN PRODUCERS. TOM MCNEILL