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Propping up sugar prices a bitter
prospect
By Marwaan Macan-Markar
BANGKOK - Thailand hopes to rally the support of
the world's leading sugar-exporting countries in a
meeting this month, in a bid to push up the price of
this commodity on the international market and help
local farmers.
The Cane and Sugar Board plans a
meeting this Friday in Phuket, a resort town in southern
Thailand, to include Australia, Brazil, Guatemala, South
Africa and Thailand.
But the agenda includes the
Thai government's effort to get these countries to agree
on a mechanism to lift the global price of sugar, after
taking into account trends in the world sugar market.
Brazil is currently the largest sugar exporter,
with a volume of 10 million tonnes a year, while
Thailand exports 4.5 million tonnes a year. Australia
exports 4 million tonnes, South Africa 3 million tonnes,
and Guatemala, 2 million tonnes a year.
The
global sugar market, though, is fed by 132 countries
that produce the commodity, and reports on the Food and
Agriculture Organization's (FAO) website forecast that
world sugar production for 2003 could reach 140 million
tonnes.
According to the United Nations food
agency, the price of sugar on the international market
is close to eight US cents per pound, which is a
marginal increase from the price it was being traded at
in mid-2001, at 6.69 cents per pound (14.75 cents per
kilogram).
Thai authorities have told the local
media that the price needs to be set at 12 cents per
pound for sugarcane farmers to enjoy a profitable return
on their harvests.
Thailand's faith in such an
organized mechanism to lift the price of sugar - rather
than let the forces of free trade in the international
market determine it - comes seven months after it
pursued a similar policy to stabilize the price of rice.
Governments at a meeting in October last year,
attended by the world's leading rice exporting countries
- China, Vietnam, India, Pakistan and host Thailand -
struck a deal to coordinate the world's rice trade, but
a mechanism to achieve price stability was not as easy
to come by.
This initiative by Thailand reflects
a problem that persists in global trade of agricultural
products, said Francis Perez, trade policy advisor at
the East Asia office of Oxfam, the British development
agency running a global campaign for fair trade.
The subsidies being poured into the same
agricultural products harvested in the developed
countries have heightened this problem, he added. "Sugar
is the single sector in European Union agriculture that
is in most need of reform. EU taxpayers contribute
US$1.7 billion every year to subsidies to the sugar
industry. This is in the form of extremely high
guaranteed prices for EU sugar producers that [lead to]
overproduction," he explained.
Studies done by
Oxfam, such as the one titled "The Great EU Sugar Scam",
reflect this bitter truth. "European consumers and
taxpayers are paying to destroy livelihoods in some of
the world's poorest countries," it pointed out. "They
are paying for a system that rewards a handful of sugar
producers in Europe, while undermining markets and
opportunities for farmers and agricultural laborers in
the developing world."
This reality has not been
lost on Thai officials, who have identified the touchy
issue of the EU subsidies for sugar as an area that
needs to be discussed during the meeting on Friday.
However, EU officials think otherwise, saying
that the EU sugar regime has little impact on world
sugar prices. They say this cannot account for the drop
in world prices because "EU exports made up only 11.5
percent of all world exports in 2002".
"The EU
export subsidies do not undermine world market prices,"
Carlos Bermejo-Acosta, trade counselor of the delegation
of the European Commission, said in an interview.
"Responsibility for depressed world sugar prices rests
essentially with other countries, which are leading
sugar exporters, notably Brazil."
According to
an FAO projection of the sugar sector until 2005, the
world will see production keeping pace with consumption.
"In aggregate, the developing countries are projected to
account for virtually all of the global increases in
sugar production, thus raising their share of world
production from 63 percent in 1993-1995 to about 70
percent by the year 2005."
It adds that
developed countries are "projected to have virtually no
net increase in their sugar production".
The
projected increases in production will emerge from
Brazil - expected to be producing 11 million tonnes of
sugar by 2005 - and Thailand, due to see an increase of
up to 5.5 million tonnes of sugar by 2005.
But
the FAO's forecast for sugar prices may not be a sweet
fact for Thai trade officials to digest: "The world
free-market price projected for the year 2005 shows
practically no change in real terms."
(Inter
Press Service)
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