NEW DELHI: Sugar prices have been slumping at a time when Brazilian sugarcane producers were already struggling because of government fuel policies that have reduced demand for ethanol.
According to preliminary estimates by Brazilian consultancy Agroicone, Indian and Thai subsidies would add 4 million tonnes of sugar, or nearly 7 percent, to world supply, dragging down prices 13 percent.
Unica’s Leão said producers are more concerned with Thailand’s policies. That country’s share of global exports has risen 4 percentage points to 16 percent in the last three years. Brazil’s share has fallen by 5 percentage points to 48 percent during the same period, according to Unica.
It may be difficult to prove that Thai authorities are breaking trade rules with policies that include local price supports for producers and a fund to help farmers. Still, Brazil’s government may be willing to try.
“In the case of Thailand, it is a very complex system, but if producers are able to build a strong case the government will without a doubt support them and launch a case,” said a senior Brazilian official involved in trade policy.
Challenging India’s sugar subsidies may be more difficult politically for Brazil, since the countries are partners in the BRICS group of large emerging economies. India is also a player in talks to seal a global trade deal brokered by Brazilian diplomat Roberto Azevedo, new head of the WTO.
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