"SUGARY" PICTURE FOR SUGAR-WILL INDIA BOTCH UP AGAIN?

Sugar, currently under focus for wrong reasons, is again gaining attention in India as the new crushing season is about to start. Though it is often denigrated by nutritionists and health experts, calling it the "white poison" because of its association with some of the human ailments in vogue all over the world. Dental decay caused by sugar is a relatively minor ailment which can be pre-empted by regular dental hygiene practices but more serious disorders like obesity, CVD, Diabetes etc can be controlled only by limiting sugar consumption as far as possible. Politically sugar is a sensitive commodity, especially in India where it is felt that shortages and high prices can rock the government in power due to consumer back lash. One can understand the dilemma of the government which is supposed to lift the sugar controls giving a free hand to the industry to respond to market forces and presently levy sugar under which the industry has to surrender a portion of its production to the government for PDS is just 10%. Under these circumstances is it wiser to allow export of sugar which may have an impact on domestic prices? If GOI can take a bold decision to allow exports, it should have the courage to face some hiccups in the market through rise in prices but in the long run such a policy will be good for the country through decreased consumption and reduced incidences of diseases associated with sugar.

"Sugar output is likely to rise 300,000 tonne in the year starting October to 24.60 million tonne due to higher cane output, food minister K V Thomas said on Wednesday, keeping domestic supplies steady during the festival season beginning late September. "The cane commissioners of 10 producing states met on Tuesday, and based on their assessments, the production figure has been reached," Thomas said. India, the world's second-largest sugar producer, expects to consume close to 22 million tonne in 2011-12, leaving surplus stocks for a second successive year, but the food ministry's output projection is sharply lower than the industry's forecast of 26 million tonne. The lower-than-expected official forecast may hurt the industry's demand for allowing 3 million to 4 million tonne of sugar exports during 2011-12, although domestic supplies are expected to be adequate. The government permitted sugar exports of 1.5 million tonne under the open general license in 2010-11, after two successive years of a shortage, to help mills gain from higher global prices and pay farmers on time for their produce. According to the first advanced estimate released last week, the country's sugarcane production is expected to rise marginally to 342.2 million tonne from 339.2 million tonne a year before. More production in 2011-12 will prevent any irrational surge in domestic sugar prices, which have remained subdued for around five months now, especially during the festival season. Ex-factory sugar prices in Delhi are currently ruling in the range of R2,845 to R2,945 a quintal. Higher output may also enable India to take advantage of a smaller cane crop in Brazil, the world's largest producer and exporter of the sweetener, by exporting some quantities in 2011-12. Earlier this month, Brazil's national secretary of production and agro-energy, Monoel Vicente F. Bertone, had told FE that the country expected its sugar output to fall to 37.07 million tonne in the crop year through March 2012 from 38.17 million tonne a year before. Global consultancy firm Kingsman has said India needs to take advantage of its higher production in 2011-12 and lift government curbs to emerge as a regular exporter in a global market currently dominated by Brazil and Thailand. India allowed sugar exports in 2010-11 after a gap of two years when it faced a shortage, although sugar mills said they lost out on a chance to cash in on soaring global prices in February and March due to the late decision by the government".

World over many countries are taking precautionary measures to protect their population from food related health afflictions through policy interventions and the UNO is scheduled to discuss this issue to arrive at a global consensus regarding use of fiscal measures to make high sugar foods and other unhealthy ones costlier to the consumers. Hopefully such measures may curb consumption significantly. India has an opportunity to demonstrate its resolve to toe such a line by allowing the domestic price of sugar to rise according to market forces which in the long run is likely to benefit the country. A larger and more logical question that will beg for an answer is why should the country encourage cultivation of sugarcane at all or how about diverting the land for production of more critical crops like oil seeds and legumes. In orchestrating such a drastic policy shift government needs foresight and courage of an extraordinary nature. It is doubtful whether the present government has the stomach for such an initiative.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

DECONTROLLING INDIAN SUGAR INDUSTRY-NEED OF THE HOUR

Sugar, though sweet to taste has always been a "sour" point that pitchforks GOI and the sugar sector on a collision course ever since India's independence. While during the "license and permit raj" the sugar policy to force the industry to sell to the PDS a major part of its production at below production cost was considered normal, after the economic liberalization policies of early nineteen nineties continuing with it is nothing but an anachronism. More over India is the world's second largest producer of cane sugar and the industry holds large stocks not being able to achieve freedom regarding sale of its products guided by market forces. Though there has been some talks regarding freeing the sector from GOI controls, nothing concrete seems to be happening except frequent announcements by the concerned bureaucrats and ministers about their "intent" to decontrol. The latest such pronouncement comes from another Babu in the Food Ministry and industry keeps wondering whether any action at the ground level will follow this.

The government is open to lifting a decades-old control over the sugar sector if interests of farmers as well as consumers are protected, food secretary BC Gupta said on Tuesday. Currently, the government decides how much sugar mills will sell in the market every month and has mandated them to supply 10% of their output at below-cost for state-run welfare programmes. It decides the minimum price the mills have to pay for sugarcane purchases and also imposes periodical limits on sugar stocks large buyers can hold to discourage hoarding in times of a shortage. Industry executives say all these regulations are leading to a regular cycle of boom and bust and also stifling the growth of the sector that hasn't attracted any foreign direct investment for years now. "There is no stumbling block in decontrolling the sugar sector, provided farmers'... interests are protected. We have to see that farmers get fair price for their produce and also the interest of consumers shouldn't suffer," Gupta said. Any decision on loosening the control will be taken after consulting state governments and other stakeholders, he added. The secretary, however, refrained from giving any time-frame for lifting the regulations over the sugar sector. Industry executives say while mills pay high prices to farmers for cane purchases, they don't have any right to fix the price of sugar at which they sell to the government for supplies under the public distribution system. Although intended to benefit farmers as well as consumers, the tight regulations often lead to mills holding back payments to farmers whenever sales realisation drop below costs.

These are the days when sugar is receiving attention for all wrong reasons and many consumers consider it as white poison because of its purported contribution to diabetes and other life style disorders from which world is suffering. A logical question is whether GOI is justified in holding to the philosophy that sugar is an essential commodity and therefore needs subsidization! Probably sugar can even be considered for removal from the PDS basket that is being distributed, leaving the consumers to buy their needs from the open market. There is good possibility domestic consumption may come down drastically sparing the population the sufferings from modern diseases. After all most of the PDS sugar is siphoned off by unscrupulous elements of the society costing the exchequer heavily. If demand for sugar comes down, naturally the sugarcane cultivation, highly dependent on water, will also will decline, sparing the land for production of other more valuable and nutritious crops!

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com