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Bitter harvest awaits India sugar farmers

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Staff Writer | April 19, 2018
Sugar production in India this year (2017-18) is expected to touch 30 million tons, an all-time high.
India sugar farmers
Food production   The export market is not an option
With such a record production, comes a host of problems—the most important one being non-payment of “cane dues” to farmers. The government can ill afford to ignore this crisis of plenty.

This sugar season started with conservative estimates of 23-24 million tons of production, triggering a debate on whether imports of sugar may be required. Things changed dramatically in the January-March 2018 period with periodic revision of production estimates.

Both the Indian Sugar Mills Association and the Nation Federation of Cooperative Sugar Factories were way off the mark in their early estimates. The government agencies were no better.

The big difference has come from Maharashtra, whose initial estimate of production was 6-7 million tons. Production now looks set to clock 10+ million tons.

Neighbouring Karnataka also has an ‘impressive’ performance, of 3.5 million tons. Add another 10.5 million tons from UP and the story is more or less complete.

In terms of percentage, Maharashtra shows an increase of 140% over last year, Karnataka 65% and UP 20%.

Given the fact that the production of sugar will be about 30 million tons, the estimated surplus has already pushed down prices.

With the current level of sugar prices, mills are not be able to cover even their costs. Sugar mills are not in a position to pay both the farmers and meet other costs including wages.

The export market is not an option, with international prices at 12.5 cents/pound of raw sugar and $346/ton of white sugar.

Given the huge price differential between domestic and international prices, the export market is not accessible unless the country come up with innovative WTO-compliant subsidies.