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#2 Sugar Producer “Going Through a Tough Time”

In The Hindu Business Line, Pallavi Munankar writes that India’s sugar industry “is going through a tough time as the issue of mounting dues that mills have to pay sugarcane farmers seems to be a hard target.”

The #2 global sugar producer is suffering a surplus of raw sugar in its domestic market, while a worldwide glut has depressed export prices.  As such, Indian sugar mills have found it increasingly difficult to pay farmers what the farmers are owed for this year’s cane crop.

Munankar, a research analyst at Geojit Comtrade Ltd., notes that the government has taken steps “to put an end to this crisis,” including “incentives” to encourage raw sugar exports.

“In February,” he writes, “the Cabinet Committee on Economic Affairs permitted a subsidy on the export of raw sugar for shipments of up to four million tonnes.”

In April-May, the subsidy was reduced, but was raised again in June-July.

It was again increased for August-September, thanks in part to “falling interest among millers who were suffering losses due to a mismatch between selling price and procurement cost.”

It is not clear if the government’s export subsidies will continue for October-November, as domestic stockpiles “are keeping prices under check in the domestic market” and export prices remain flat even with the government subsidies.

“Hence,” Munankar concludes, “in order to ease this burden, the Government should come out with more effective proposals to encourage exports and curb imports of sugar to provide the much-needed relief to the bleeding industry.”

So the preferred solution to the failure of government intervention and interference in the sugar market in India is even more government subsidies of this already heavily subsidized industry.

And some in the U.S. believe this is the “free market” American farmers should compete in without protection?

Congress should give serious consideration to Rep. Ted Yoho’s “zero for zero” proposal to end the U.S. sugar program, but only if/when foreign governments, such as India, end theirs.