Brazil's cane industry has condemned as "short-sighted" a European Union plan to raise sugar exports 500,000 tonnes above quota limits in response to a market squeeze which has sent prices soaring.
The Brazilian Sugarcane Industry Association, Unica, said the European Commission was "sending wrong signals" to the region's beet growers by permitting the breach of an export ceiling laid down by the World Trade Organisation.
EU farmers were being "incentivised" to sow more beet for the 2010-11 season, even though the strong prices inherent in the futures markets were "merely conjectural", Unica said.
"This short-sighted policy is potentially damaging for the EU sugar market as EU farmers will be left with additional surpluses to be exported" when sugar prices fall back to historic levels.
The association demanded that the EU, before enacting its plans, submit them for approval by WTO sugar-panel members Brazil, the world's biggest sugar producer, Australia and Thailand.
The comments followed the announcement by Mariann Fischer Boel, Europe's farm commissioner, that extra EU exports were justified by the "exceptional" situation in the sugar market, which has been squeezed by disappointing crops in both Brazil and second-ranked producer India.
Global production will fall 8.1m tonnes below demand in 2009-10, according to Barclays Capital.
European sugar dynamics, 2009-10 (year-on-year change)
Beet sugar production: 15.2m tonnes (+14.1%)
Imports (raw value): 3.50m tonnes (+7.7%)
Exports (raw value): 1.48m tonnes (+33%)
Year-end stocks: 3.19m tonnes (+46%)
Source: USDA attache report, Nov 23
Europe' however, has enjoyed a bumper beet harvest, thanks to record yields in many countries, and has capacity to export 1m tonnes, according to beet growers.
"With production below consumption and diminishing sugar stocks, sugar prices have risen to unprecedented levels, to the detriment of consumers in poorer countries," Ms Ficher Boel said.
"The price situation on the EU and world market… [is] such that out-of-quota sugar produced in the EU can be exported without violating the EU's WTO subsidy commitments."
White sugar hit a record high in London earlier this month, with raw sugar reaching a 29-year high in New York.
The announcement was welcomed by European sugar beet growers, who termed it the "right proposal at the right time".
"EU sugar production for 2009-10 has been higher than expected due to positive climatic conditions, leading the EU to have a unique opportunity to supply the world market with additional quantities," the International Confederation of European Beet Growers said.
And it urged Brussels to keep an open mind before imposing strict limits on exports in 2010-11.
"The commission should be ready to react and make full use of EU export potential, if and when needed, whilst remaining in compliance with its WTO commitments," the confederation said.