Government Subsidies https://www.wsj.com/articles/india-buried-in-sugar-tries-to
ID: 1162727 • Letter: G
Question
Government Subsidies
https://www.wsj.com/articles/india-buried-in-sugar-tries-to-dig-out-1527591604?mod=djem_jiewr_IB_domainid
The Indian government sets price guarantees for growing sugar but the farmers are only paid when refiners sell the sugar. The price of sugar is currently so low that refiners are hesitant to sell of their huge and growing sugar stockpiles. Refiners are hoarding the sugar and waiting for a better price or better incentives to sell. The Indian government wants to incentivize the refiners to sell the sugar, but if the refiners dump the sugar on the global market at too low a price, India risks sanctions from the WTO.
What are the risks if India's sugar refiners start selling off their sugar stockpiles?
Explanation / Answer
The risks of selling large stockpiles of sugar at once are discussed below:
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