Sugar Goes Sour!

A glut has kept sugar prices low. The resulting arrears to farmers have become a headache for the government in an election year. Can it fix the problem?

- Sumant Banerji

The NIP in the air and the hazy skyline in October are tell-tale signs of onset of winter in northern parts of the country. In India’s most populous state, Uttar Pradesh, there is one more giveaway – long queues of tractors on highways overloaded with the perennial sturdy grass, sugarcane. Around this time of the year, this is a common spectacle in two other big states – Maharashtra and Karnataka – as well. The three states, between themselves, produce almost 80 per cent of sugarcane grown in India. The crop’s popularity with farmers has made India the world’s second-largest sugar producer after Brazil.

However, the farmers are unhappy. In the last two years, India has been producing far more sugar than it consumes. A glut in global markets means exporting excess production is not easy. The 50 million farmers who grow sugarcane in the country are facing the brunt of this. As of December 31, 2018, mills owed sugar farmers close to 12,000 crore. They say they are unable to pay as sugar prices have crashed while their costs have not (mills cannot by law refuse to buy sugarcane brought by farmers; the price, too, is fixed by governments).