The fact that sugar prices have gone up – is now old news – you would have heard it umpteen times in the past few months – newspapers – TV Channels – articles on the net. If you were told that sugar prices are at a 30 year high – that would be a bit of a shock?
What is also interesting is the why - but, before that a few numbers.
75% of sugar comes from sugarcane in tropical countries
25% from sugar beet in temperate countries
70% the world’s sugar is consumed in the country where harvested
Only 30% left to be traded
Per Capita consumption in India is 20 kilograms of sugar
Annual Consumption in India – 23 million tones
Sugar, like all commodities; follow the high price – more production – low price – low production cycle
More than ½ of Brazil’s sugar, the world's largest producer is used for ethanol production for its cars, introduced to reduce dependence on oil
Global stocks are down 23% and
India’s stocks down by 63%
Why?
Indian production fluctuates alarmingly between 14.5 million tonnes and 22 million tonnes, due to the monsoons and price fluctuations. Low production in India, coupled with low global production (Brazil’s production is down due to more rains); low global stocks as well as low domestic stocks result in high prices for you and me.
Given that sugar is so important, one would wonder why the government can’t manage reserves which can be released during years of low production and stockpile when production is higher. You would think the government is downright stupid – can’t even add up a few figures – but viola as usual we are wrong.
Our street smart minister for agriculture is after all Sharad Pawar. With record productions in 2006-07 and 2007-08, India was sitting on ten million tonnes of sugar at the beginning of 2007-08 and that was whittled away by two consecutive releases to depress sugar prices before the national elections in April-May 2009 and Assembly elections in Maharashtra, Pawar’s home state, followed in October 2009.
To hell with you and me – to hell with prices that farmer’s get – to hell with all the millions of livelihoods that are associated with sugarcane – anything to win an election.
Governments set cane-procurement prices – so private mills don't pick up the full harvest if there's a glut. Governments determine the catchment area – mills are not allowed to buy cane outside a certain area – though it is best for mill to decide their catchment area as sugar yields from cane are the best when crushed within 24 hours. Often movement of cane and molasses movement is banned across state borders, restrictions are placed on price, sale quotas and value-additions.
Alcohol production license are expensive to obtain. Levy prices account a percentage of every mill’s production; free priced sugar sales are controlled. Imports can be arbitrarily banned and so can be trading of sugar on the commodity exchange.
More than 80 % of sugarcane comes from UP, Maharashtra, Karnataka and Tamil Nadu. In many of these areas sugar is a major industry and therefore, a key employer of both farm labour and semi-skilled mill workers. Bihar, ideally suited to grow sugarcane has been messed up by the cooperatives, 50% of state water in Maharashtra is used to grow sugarcane on 4% of its area.
Look out for higher sugar prices as sugar output in 2009-10 is most unlikely to exceed previous year's output of 15 million tonnes; ethanol requirement peaks for the automobile industry in Brazil, environmental concerns in Brazil grow over sugarcane production.
The government needs to look at the interest of the 70 million people whose livelihoods are linked to sugar - how do we increase productivity, how do we increase their incomes, how do we ensure that poor people can access sugar at reasonable costs - But who cares - it is the next election that we need to win!
Very Interesting !
ReplyDeleteOur central agri minister recently publicly told the common man that "if you cant afford sugar, dont use it, you wont suffer without it !"
ReplyDeletemy question is, if sugar is not so important, why so much of the precious water resources are being used to produce it? among all agricultural crops, sugarcane has the highest total water requirement. Is the pressure on the land and water resources caused by the production of such unnecessary commodities justified?
The minister has recently been using global warming concept in many of his statements. He should examine and answer this whether or not sugarcane production causing global warming by unscrupulous use of water?
Vineel, Sugar is probably not important for overweight, ageing and old people. For the rest it is very important and from applying sugar on the tongue of a newly born baby to, the sweets made both on religious as well as social occasions, it is but obvious that sugar is important. No wonder you and I consume on an average 20 kilograms per year. Sugarcane undoubtedly has very high water requirement and it is being grown in the wrong places. It should be ideally grown in water rich areas like UP and Bihar, rather than Maharashtra, Tamil Nadu and other places. Historically Sugarcane was always grown in Bihar and UP, no wonder, ancestors of Chanderpaul, Ramadin and other Indian origin WI cricket players, went as indentured sugar workers from India a few hundred years back. Inept governance and political interference has forced government run sugar mills to close down in these places and prevented private entrepreneurs from investing in these areas rather than in Karnataka and Tamil Nadu.
ReplyDelete