The "bitter" sugar-For consumers it is sweeter!

It is said rightly that only crying babies get attention from mothers and this applies to real life situations also when those seeking the attention always cry hoarse to get the same! Latest example is the sugar industry in India which is raising a huge hue and cry regarding the dire straits it is in because its inability to stand up to the challenges of price global melt down that is happening now. Though India is one of the largest sugar producing countries in the world, it is always Brazil that calls the shots in the sugar market because of its large cultivation area under sugarcane. This is understandable because this country has an agenda different from that of India as its mandated policy of alcohol blending with fossil fuels to the extent of 15% calls for huge production of ethanol from sugarcane which is being done directly from sugarcane juice itself rather than through the molasses route. This gives it a flexibility to switch the product mix depending on the market conditions. Due to its sustained efforts to expand sugarcane cultivation it extended the acreage by deforesting thousands of acres of forest land which in the end analysis might not turn out to be prudent because of its impact on climate changes. Any how at present it is enjoying an advantage in sugar production and it is true that a glut like situation has developed resulting significant price depression in the global sugar market. Here is a commentary on this development on which Indian sugar industry feels threatened.

"The apex body of Indian sugar industry red flagged "challenging situation" for the sector due to falling prices of the sweeteners, excess production and tightening of lending by banks that is forcing millers to sell at cheaper rates for generating cash-flow. The industry also expressed its fear of Brazil producing more sugar than ethanol because of falling crude price, which may make the situation worse for them. Raising the fear from Brazil, which could have serious implications on the international price of the sweetener, Indian Sugar Mills Association (ISMA) president A Vellayan said, "On the international front, due to the steep fall in oil prices, there is clear possibility that what might happen in Brazil is the shift from ethanol to sugar production. With the Brazilian currency falling, the price of Brazilian sugar will be so cheap that it will threaten to come into India and despite the import duty, it will be cheaper than Indian sugar."  He said government must take all possible steps to ensure that no quantity of sugar gets imported. "That's why we are demanding 40% increase in import duty and extending the subsidy for export of raw sugar so that we can export our raw sugar before the prices fall further," Vellyan said. Brazil is the biggest producer of sugar and ethanol as well."  

Added to the production glut, Brazilian currency is also depreciating making its sugar cheaper than that of India. Whether the government of India will listen to the Association and put restrictive controls on sugar imports or increase the import duty remains to be seen. Sugar scenario in India is very complex and no single step by the government can restore stability to the sugar trade.Farmers are encouraged to go in for sugarcane cultivation by providing irrigation facilities and imposing minimum support prices at which sugar mills must buy the cane from the farmers. Also there are still some controls on release of sugar by the mills in the open market , the so called "free sugar" because of government's need to buy sugar at low prices to feed the public distribution system in the country. Thus sugar may be bitter for the mills at present because of declining prices but consumers should have no complains at getting sugar at cheaper prices! However how this distorted conditions will work out for the farmers as well as the industry in the long run must concern the government which has tied itself into knots through short sighted policies during the last 5 decades.

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

THE GREAT CORN TRAGEDY-PULL BETWEEN FOOD AND FUEL!

Till recently corn was being blamed for the obesity epidemic in the US because of its connection to High Fructose Corn Syrup (HFCS) which is suspected to be metabolized differently from white sugar. Also adding to the misery of corn is the predominance of genetically modified version in the American landscape which is being viewed with suspicion by a vast majority of people all over the world. When the American government enunciated its biofuel policy, corn got a big boost and conversion of corn into ethanol through microbiological route became a big business. It is a fact that more than 40% of the grain grown in that country finds its way to ethanol distilleries for blending with petroleum fuels. The food and beverage industry which depends  predominantly on corn for formulating their products seems to be in a blind because of the escalating cost of buying their corn needs due to strong pull from the biofuel industry. The result is significant price increase for all the products made from corn including a vast array of fast foods. The fast food industry therefore has a right to blame the supply shortage for its compulsions to raise prices for these products. Here is a take on the dicey situation. 

"From the grocery store to your favorite takeout joint to the drive-thru window, you're paying more for what you eat and leaders in the fast food industry say the reason for these increased costs is the federal government's continued support of corn-based ethanol. The bushel price of corn has nearly tripled in the past decade. Forty percent of what's grown today goes into fuel tanks and that percentage could rise if the current federal mandate--known as the Renewable Fuel Standard--remains in place. "It's harder every day to offer great value because our costs are skyrocketing," Lisa Ingram, president of White Castle, recently said in Washington. "In fact, since the RFS became law our cost for beef has increased by forty-seven percent." The fast food industry contends that with more corn going to ethanol gas, there's less for traditional corn-based food products and feed for farm animals, thus driving up the costs for restaurant owners."

One wonders whether the situation is really so bad as to create a crisis for the fast food industry. After all these fast food joints are severely indicted for their junk foods which are suspected to be causing many life style disorders like CVD, blood pressure and obesity. Why not take a positive view of this development and consider this as a blessing in disguise, as less and less people would patronize junk foods when the prices go up! In a country where business is accorded a higher priority than the health of the citizen, one should not be surprised if the government eventually comes forward to provide relief to the fast food industry through some form of policy intervention! One can understand the dilemma of the government as it wants to reduce consumption of fossil fuels through admixing it with ethanol while corn production is not sufficient to meet the demands from both food and ethanol sectors. It may be time to fast tract development of commercial technologies that can convert non-food biomass into alcohol or accelerate microbiological technologies such as algae so that food sector is insulated from shortages of its feed stock.

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

A FLAWED AGRICULTURAL POLICY-DROUGHT AND CONSEQUENCES

Diversion of valuable food materials that can quench the hunger of millions of people for non-food purpose is nothing but a crime against humanity and this is what is going on in a supposed to be "civilized" country like the US. It is understandable that renewable energy is a priority for the whole world because fossil fuels cannot last for ever and world cannot sustain itself without energy with every human endeavor anchored to energy use. While energy from solar, wind, geothermal, wave and other sources is being tapped with increasing efficiency, there is one area where man is doing harm to himself by using food materials like corn soybean, sugarcane and Palm oil for converting into automobile fuels to extend the supply of fossil fuels. It is understandable if there is a vast surplus production of food that needs to be utilized without wasting them but the present situation indicates that world is short of foods unable to feed millions of people in Africa, Asia and South America. As the North American drought is spreading across the continent mercilessly, the corn and soybean production is plummeting causing world wide concerns regarding its impact on food prices. It is here that the US, a major producer of corn in the world  has to show its statesmanship and magnanimity by temporarily suspending its "corn for ethanol" policy at least for two years. Here is a commentary on this issue with which many dispassionate observers agree.  

"More than one-third of our corn crop is used to feed livestock. Another 13 percent is exported, much of it to feed livestock as well. Another 40 percent is used to produce ethanol. The remainder goes toward food and beverage production. Previous droughts in the Midwest (most recently in 1988) also resulted in higher food prices, but misguided energy policies are magnifying the effects of the current one. Federal renewable-fuel standards require the blending of 13.2 billion gallons of corn ethanol with gasoline this year. This will require 4.7 billion bushels of corn, 40 percent of this year's crop. Other countries seem to have a better grasp of market forces and common sense. Brazil, another large ethanol producer, uses sugar instead of corn to make ethanol. It has flexible policies that allow the market to determine whether sugar should be sold on the sugar market or be converted to fuel. Our government could learn from the Brazilian approach and direct the E.P.A. to waive a portion of the renewable-fuel standards, thereby directing corn back to the marketplace. Under the law, the E.P.A. would first have to determine that the program was causing economic harm. That's a no-brainer, given the effects of sharply higher grain prices that are already rippling through the economy. The price of corn is a critical variable in the world food equation, and food markets are on edge because American corn supplies are plummeting. The combination of the drought and American ethanol policy will lead in many parts of the world to widespread inflation, more hunger, less food security, slower economic growth and political instability, especially in poor countries".

Of course America is a sovereign country with full power to dictate its own policy, deemed to be appropriate to its population but under today's globalized environment can one country decide unilaterally what it will do without bothering to think about the consequences of its action?. If past history is taken into consideration, the US is the biggest food donor in the world and one can assume that same humane consideration will prevail over its response to the new situation emerging in the food front. As a super power with vast technological superiority, this country can always think of other feasible alternatives for fuel production and the non-food biomass conversion to ethanol or high fat algal production can be a feasible alternative if pursued vigorously on a priority basis. The US must provide leadership to the rest of the world in ensuring that every grain of food is conserved and no human being goes to bed with a hungry stomach!

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