EU decides to cut Australia’s growers sugar subsidies

Australia's struggling sugar cane growers will substantially benefit from the European Union agreeing to cut sugar subsidies, an industry spokesman said Friday.A successful World Trade Organization challenge by Australia, Brazil and Thailand forced the EU into the cuts to its subsidy system that will reduce prices by 36 percent.

"It means that Australian producers are going to be far more competitive," Ian Ballantyne, general manager of Queensland state sugar lobby group Canegrowers. he told Australian Broadcasting Corp. radio. "There's a lot more optimism, a lot more confidence in our industry going forward," he added. Ballantyne said European production would fall by more than 20 percent, or over four million tons of sugar a year.

The EU agreed on a major overhaul of its sugar subsidy program Thursday that the EU said would strengthen its hand in next month's WTO summit in Hong Kong. Under the old system, production was supported by generous EU subsidies and import tariffs, all of which will be phased out over a four-year period starting in 2006. EU sugar prices are more than three times higher than the global market rate and are protected by hefty import tariffs. Brussels also pays out export subsidies to get millions of tons of sugar a year off its market.

In April last year, Canberra promised to pump 444.4 million Australian dollars (US$320.7 million) over four years into the sugar industry to help downsize it and make it economically viable. The government offered Australia's 6,700 cane growers up to A$100,000 (US$72,160) each to leave the industry and up to A$50,000 (US$36,080) for harvesters. The government had pledged to include the sugar industry in a free trade agreement with the United States which began this year but U.S. sugar producers lobbied successfully to have it excluded, reports the AP. I.L.