Cane growers staring down the barrel as subsidies affect global supply

QUEENSLAND cane farmers are being hit by slumping global sugar prices caused by subsidies provided to growers in India and Pakistan.

Canegrowers Queensland chairman Paul Schembri said sugar prices were now trading at a decade low meaning farmers’ production costs were higher than what they were getting on global markets. Raw sugar prices for October delivery dropped to a low of US10.10 cents per pound on Friday.

“We are looking at a global surplus of 20-30 million tonnes of sugar, which is a substantial amount,” Mr Schembri said.

“The main problem is the subsidies provided by governments in India and Pakistan. India has gone from producing about 20 million tonnes of sugar five years ago to 30 million tonnes now.”

He said he was concerned about the economic impact of depressed prices on Queensland cane farmers and sugar towns. “If these low prices are sustained for an extended period, it will cause enormous economic damage,” Mr Schembri said.

“Some farmers have taken out forward pricing contracts and that may help but it will quickly run out. Cash flow is being stretched and farmers are having to take on more debt.

“Sugar prices on global markets always ebb and flow, but Australian growers do not receive any subsidies.”

A complaint to the World Trade Organisation (WTO) against the subsidies was now being prepared by leading sugar producers including Australia, Brazil and Thailand.