Sugar prices have surged across India rising by around 40% in a year and by as much as 50% in some states. In eight states including Uttarakhand, Punjab, Madhya Pradesh and Odisha prices have crossed 65 rupees a kilogram. The all-india average retail price of sugar stood at 62 rupees and 47 paisa a kilogram on August 23rd nearly 35% higher than the same day last year. On July 23rd the average price was 48 rupees and 62 paisa. So why has sugar suddenly become so expensive? Let's understand.
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| Why are Sugar Prices Rising in India |
Why are Sugar Prices Rising in India?
The government says several factors are behind it, including lower than expected domestic production, higher demand ahead of the festive season, weather damage to sugarcane, tighter global supplies, as well as speculation and hoarding. The opposition political parties have blamed it on ethanol production, arguing that diverting sugar cane to ethanol has reduced sugar supplies. Am admi party chief Arvind Kejriwal said it contributed to the price rise while Congress general secretary Jam Romesh called for an E20 policy review. The center has rejected the claim saying it is monitoring supplies and taking steps to keep sugar available. The Union Consumer Affairs, Food and Public Distribution Ministry said in a statement on August 20th that it is ensuring stable prices for consumers. It maintained that the rise in sugar prices could not be attributed to ethanol, adding that nearly 3/4s of the ethanol produced in the country now comes from grains, particularly maize.
The Union government has capped sugar stocks for dealers at 400 tons from August 1st to November 30th. From September 1st, bulk consumers can hold only up to 15 days worth of sugar stock. Lal Singh Gangwar, principal scientist at the Indian Institute of Sugarcane research in Lucknow says that a 10% rise in sugar prices during the festive season was normal. He said "Farmers and sugar mills are facing higher costs because diesel and fertilizer prices have risen due to the war in West Asia." He also said that last year, the government banned sugar mills from using sugarcane juice to produce ethanol.
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What do farmers say?
Farmers groups have blamed hoarding by large traders ahead of the festive season. Ajit Navale, a sugarcane farmer from Maharashtra and leader of the All india Kisan Sabha said, "India produces around 320 to 340 lakh tons of sugar annually against domestic consumption of around 280 to 290 lakh tons." He argued that while stocks have fallen to around 38 lakh tons from 42 lakh tons last year, the decline is not enough to explain the sharp rise in prices. He alleged that some large traders are hoarding sugar and engaging in black marketing to profit from festive demand. The center has allowed 10 lakh tons of sugar imports.
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