scorecardresearch
Follow Us:
Tuesday, January 25, 2022

WTO’s findings on India’s domestic support to sugarcane growers has profound implications

🔴 When cane is being bought at minimum support price (MSP) by mills, not government, how can such payments constitute “market price support”?

By: Editorial |
Updated: December 18, 2021 9:37:04 am
While they enabled exports of 5.96 million tonnes (mt) and 7.07 mt in these two years, high global prices have ensured continued shipments even without subsidy.

There is no immediate threat to India from a World Trade Organisation (WTO) panel’s report recommending withdrawal of its subsidies on exports. The reason is that these subsidies — amounting to Rs 10,448 per tonne in the 2019-20 sugar years (October-September) and Rs 6,000 per tonne for 2020-21 (slashed to Rs 4,000/tonne in May) — are no longer in place. While they enabled exports of 5.96 million tonnes (mt) and 7.07 mt in these two years, high global prices have ensured continued shipments even without subsidy. Indian mills have already contracted some 3.5 mt of exports and may well do 6 mt-plus in 2020-21. To that extent, the WTO panel’s finding, that India’s so-called lump-sum assistance for exports constitutes “prohibited subsidies”, is like closing the stable door after the horse has bolted.

Thanks to the record exports of the last two years, Indian mills have started the new sugar year with stocks of 8.3 mt, against 14.5 mt in October 2019. With an estimated production of 30.5 mt, domestic consumption of 26.5 mt and exports of 6 mt, they should close with stocks of 6.3 mt. That level, equivalent to less than three months’ consumption, would be comfortable from the standpoint of the industry. It would be so for consumers, too, given that factories usually commence crushing operations from early November. The credit for the whittling down of stocks goes to exports and also the Centre’s biofuels programme. The target of 10 per cent average ethanol blending in petrol is set to be achieved, with 3.4 mt of sugar equivalent getting diverted to ethanol in 2021-22, compared to 2.1 mt and 0.8 mt in the preceding two years.

More than the pronouncement on export subsidies, it is the WTO panel’s findings about India’s domestic support to sugarcane growers — its allegedly exceeding the permitted 10 per cent level of total crop value — that has profound implications. The panel’s estimates of the country’s aggregate measure of support to cane farmers, at Rs 1,11,106.583 crore in 2018-19, being way above the permitted Rs 12,304.90 crore, need to be challenged. When cane is being bought at minimum support price (MSP) by mills, not government, how can such payments constitute “market price support”? MSP is, in any case, a matter of domestic policy. To give it or not to, is for India to decide.

This editorial first appeared in the print edition on December 18, 2021 under the title ‘Not so sweet’.

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Opinion News, download Indian Express App.

  • Newsguard
  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
  • Newsguard
0 Comment(s) *
* The moderation of comments is automated and not cleared manually by indianexpress.com.
Advertisement
Advertisement
Advertisement
Advertisement