For people born even before Independence in 1947,sugar issue has not been too sweet in the last 63 years. During the Second World War period and after the war too, people used to take tea with gud (jaggery) rather than sugar several times during the year because sugar used to disappear from the markets somewhat mysteriously.
One could blame less production for these shortages hitting the markets occasionally after Independence, but doubts used to linger in the minds of the people that politics rather than economics used to be the reason. One recalls that just before the 1971 general elections, sugar used to sell at 14 annas (87 paise) a kilogram, but shortly thereafter, the price had risen by at least 100 per cent. Why?
The answer is inescapable that sugar prices have something to do with electoral politics. The same issue affects, perhaps, cement too, but let us confine ourselves to sugar.
Sugar maybe harmful for health of many but one does not rule out the role sugar plays not only with respect to people taking tea, coffee and other beverages, but also for manufacturers of cold drinks, chocolates and condiments and thus business and politics have a close relationship in this respect too. Sugar therefore is not only an agricultural produce but plays a significant role in the country’s economy.
It has a great impact on farm economics too and several politicians since the last three or four decades have sought to help farmers by creating sugar co-operatives on the one hand and uniting farmers through activism for obtaining higher prices for their produce on the other. Another aspect of sugar economics is that while the mills produce sugar by crushing cane and making sugar, they also create huge volumes of by-products such as alcohol, which can be used for chemical industries on the one hand and for making alcoholic drinks too from the remnant molasses on the other.
The sugar year begins on October 1 every year about the time the crop is harvested and lasts till September 30 the next year. This is the time the Centre announces minimum support priced per quintal (100 kilograms) of sugar cane. However, the sugarcane producing states generally adds a few rupees more, depending upon their financial capabilities. The final price is called the State Advisory Price (SAP) which usually satisfies the farmers.
This year, for reasons best known to the authorities concerned, the Union Government had promulgated an ordinance regarding cane prices, which in effect deprived the states from announcing the SAPs. This was a grievous blow to sugar cane farmers who could not negotiate higher prices than announced by the Centre. That is why thousands of them had descended on Delhi demanding withdrawal of that ordinance and to the great embarrassment of the Government of India, the farmers supported by most opposition political parties, had won and left Delhi after vanquishing the mighty Government of India in this battle of wits.
It is mostly the farmers of Uttar Pradesh and Bihar who had come to Delhi demanding higher prices. The sugar cane farmers of Maharashtra, which comes second after UP in the production of sugar, are not affected because the sugar co-operatives there are very strong, every farmer being members of the co-operative societies and hence protected against fluctuations in prices of sugar cane. Perhaps the same movement in UP could benefit the farmers there too although it is known that for social reasons perhaps, the co-operatives in the north are generally not that effective.
In the meantime, what about the consumers? Sugar is being sold now at Rs. 35 a kilogram or more, thanks to the excessive exports in the previous years even while there were signs of shortage on the horizon. Then, when there is excess production of sugar, the world market is also full of this commodity. This has been the experience in the past.
There has also been experience in certain years when farmers had burnt their sugarcane produce because the price in the market for cane have gone down substantially.
One wonders how long will the country suffer from this syndrome of excess and less production and high prices and very low ones, year after year? One also wonders whether farmers of the northern states are incapable in organising themselves under sugar co-operatives as in Maharashtra and the other states in the south.
Actually, there is a larger issue of prices of agricultural commodities which generally go against the interests of the farmers. We have seen during recent years farmers throwing away their excess tomatoes on the roads, potato prices fluctuate violently with the farmers finding it more “economical” to leave the potatoes not harvested because the cost of harvesting and marketing becomes too high compared to the market prices offered to such farmers.
Perhaps it is time the Government considers revising the terms of reference for the Commission for Agricultural Costs and Prices (CACP) in view of recent experiences with the drought too playing a role in pricing of agricultural commodities.