 Government Intervention
Like every country in the world that produces sugar, Australia provides a generous level of government support to help its domestic sugar industry overcome the distorted world dump market for sugar.
In Australia 's case, this intervention takes the form of direct payments to growers, a sugar monopoly that controls the sale of sugar, and domestic sugar prices well above dump market levels.
The federal government offered $43 million in payments and interest rate subsidies in 2000. By comparison, U.S. sugar farmers receive $0 from the government.
The Australian aid given in 2000 was surpassed by the $82 million in state and federal subsidies doled out in the 2002-03 crop year to help Australian sugar producers cope with low prices.
Producers from Queensland—the area where 95% of the nation's sugar is produced—had already been given $11 million in low interest loans to assist with replanting at the beginning of that crop year.
Also helping Australia 's sugar industry overcome the most unstable commodity market in the world is Queensland Sugar Limited (QSL), a marketing monopoly that buys and sales the nation's sugar through a single desk marketing arrangement.
Because of its size, QSL is able to wield significant control over the domestic market and lucrative sugar markets in the Asia/Pacific region.
Production and Price
Australia produces 5.2 million metric tons of sugar per year, of which 4.2 million is exported by QSL. This makes Australia the second largest sugar exporter in the world.
Australia imports a paltry 10,000 tons of sugar per year—that's compared to 1.65 million tons imported by the United States.
Australia does not need tariffs to keep imports out of its market. High shipping costs to the country down under and monopolistic marketing practices act as a deterrent.
Wholesale sugar prices in Australia during 2004 were 15 cents per pound, 50% above the world dump market price.
Grocery store shoppers paid 43 cents per poundâ??the same retail sugar price paid by U.S. grocery shoppers.
Trade with America
Australia is one of the 41 countries from which the United States imports sugar. It has the fourth largest share of America 's WTO-mandated market access commitment, accounting for 8% of all imports. The United States is forced to accept this sugar whether the market needs it or not.
The U.S. market is already oversupplied with subsidized foreign sugar, which drives down prices, forces sugar facilities to close, and threatens 146,000 U.S. jobs. Efficient U.S. sugar farmers cannot afford to trade away more of their market to Australia .
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