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21 Sep, 2009 05:30

Indian sugar industry in bitter times

The world's number two sugar producer is seeing a huge drop in output. With an insatiable appetite for sugar a part of country's culture – rising prices and a fall in domestic production are leaving a bitter taste.

Its vast fields are part of what puts India second only to Brazil in giving the world its sugar, but a weak monsoon season has seen production slashed from 23 million tons last year to 15 million.

Farmers in the district of Muzzafarnagar work an average of just two acres, making it too expensive for them to invest in better methods or machinery.

“Not all farmers have access to irrigated water, or wells to draw water from. Diesel for water pumps is also expensive. So we are dependent on rain and, with low rain, the crop has not been good this year,” farmer Maange Ram says.

India now has to import sugar, but global prices have shot up to their highest level in nearly three decades. In India, sugar prices have doubled since the beginning of the year.

At one of New Delhi's oldest sweet shops, housewife Neelima Rajpal has to fork out more to buy sweets for the ongoing festive season.

“The high prices do pinch, but there are moments when we have to buy sweets, so we do. The children like sweets too and when we have guests we also buy,” Rajpal says.

Another reason behind India's falling production is that sugar's volatile price is forcing farmers into other crops.

Surinder's family raised sugarcane for generations, but when sugar prices fell by more than 40%, he replanted his field with yam. His earnings this year have more than doubled.

Hardly any of the money made from Indian sugar reaches the farmers. Rajbir Singh wants the government to enforce a better deal for growers.

“Just as the price of sugar has doubled, so should the price of sugarcane be doubled. We farmers can withstand some loss, but if there is too much loss in growing sugarcane, we'll stop. The cost of labour has gone up and with lower rainfall, this crop cannot feed my family. If sugarcane prices don't go up, I may stop growing sugarcane next year,” Singh says.

It is clear there has to be a balance between the price of sugar and the price the farmer gets. If the Indian government does not raise procurement prices soon, next year there'll be even fewer Indian sugarcane farmers, which could leave a bitter taste in consumers’ mouths.