By David Loyn BBC developing world correspondent

Sugar cane farmers get a raw deal

The sugar industry in Mozambique should be one of the world's success stories.

With low labour costs and perfect growing conditions, its sugar cane is of the highest quality.

It is the country's largest private employer and success for this industry could be a key engine for growth.

But it is only now emerging from the mismanagement and neglect of colonialism and civil war.

The South African sugar giant Illovo has taken over one of Mozambique's biggest sugar factories at Mallagra, north of the capital Maputo.

Trade fight

They are hoping that the government will succeed in increasing the quota allowed to Mozambique to sell into the highly regulated and subsidised markets in Europe and the United States.

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With prices close to $500 a tonne in Europe and $400 in the US, this has obvious attractions against an average price of $270 elsewhere, which does not even cover their cost of production.

"I don't see the world sugar market as fair. It is very distorted. There is oversupply worldwide, and intervention and tariff protection make it a very artificial market," says Lee Elkington, the finance manager of the Mallagra plant.

Campaigning groups are pressing the government to take a tough line at the trade talks.

Antonio Tovela, a campaigner with the small farmers' union UNAC said:

"We would appeal to the international government to stop subsidies altogether. That would be a level playing field for us to have a platform whereby all producers can actually benefit from their efforts."

GM crops

UNAC, which has links to the British aid agency Action Aid, are campaigning against other threats from the North, like the arrival of genetically modified foods.

GM crops represent a significant cultural challenge to peasant farmers, because often the seeds cannot be replanted, but new seeds have to be bought from the company every year.

The issue of food security is literally a matter of life and death in a country where the vast majority of people still work on the land, compared with a much smaller proportion in Europe.

Government caution

But the government is cautious about taking a hard line on sugar.

The deputy Agriculture Minister, Joao Carrilho, believes that Europe and the United States are now beginning to talk seriously about lowering subsidies for the first time.

He wants Mozambique to cooperate through the African Union and other groupings to appeal for a balanced approach, fearing that a free-for-all in agriculture could make food more expensive in Mozambique, which is a net food importer.

He told the BBC: "Are we prepared to open our sugar market today and say imports should be free? No we are not."

The key principle of trade liberalisation as pursued in the World Trade Organisation is to ultimately lift all tariff barriers.

But with massive subsidies propping up farmers in the developed world, the poorest countries, particularly those which are only now emerging from the shadow of conflict, will demand protection to let their industries grow.

Hopes and fears

Sub-Saharan Africa, the region with the largest number of poor countries anywhere in the world, accounts for less than 2% of world trade.

The negotiations in Mexico next week are being billed as a so-called 'development round', designed to help them trade their way out of poverty.