Sugar prices have risen sharply in India, with agricultural economist Professor Ashok Gulati blaming lower production, falling stocks and the diversion of sugarcane towards ethanol.
Speaking to India Today, Gulati said sugar stocks had fallen from around 8 million tonnes to nearly 5 million tonnes, while production was down by about 10%. He said the combination had created pressure on domestic supplies.
Gulati argued that the government should have acted earlier by allowing sugar imports. He said imports could have been opened four or five months ago, before stocks reached critically low levels.
The economist also criticised the 100% import duty on sugar, saying it restricted the market’s ability to respond to the shortage. He suggested that the government could have considered importing sugar or ethanol, or encouraged mills to produce more sugar.
Gulati warned that prices could rise further as the festive season approaches and demand increases. He also said delayed imports may take time to improve supplies.
Criticising government control over the sugar sector, Gulati said authorities influence several aspects, including sugarcane prices, ex-factory prices and the quantity mills can release into the market.
He called for greater liberalisation and said farmers and sugar mills should have more freedom to decide between producing sugar and ethanol based on market prices.
Gulati said the current price surge should serve as a warning for policymakers and urged them to reconsider the way the sugar sector is regulated.