Rising prices: Raids on sugar hoarders

Even as prices rise alarmingly, sugar worth Rs three crore has been seized in seized in raids in Kolhapur, Akola and Raigad in Maharashtra.

The country, which is the world's second largest producer of sugar, has been hit by an acute shortage, sending prices spiraling. The raids on sugar hoarders come amid allegations that the government's decision to allow mill owners to export till last year only ended up helping hoarders and that not enough was done to help farmers deal with a bumper crop.

Brinda Karat, member of the CPM Politburo, says: ''The government allowed exports till December. Then in a bizarre turn of events, it allowed import of raw sugar in January.''

There are leads to the present crisis to be found in old files, documents that are now with NDTV. They show that:

• In 2007-2008 India recorded a bumper harvest.
• The Centre's Minimum Support Price was at Rs 81. This is the minimum price at which famers sold each quintal of sugarcane. The only exception was Uttar Pradesh. The biggest sugar producing state was going to polls and the BSP government fixed the support price at Rs 140.
• Farmers had no means of holding on to the bumper crop and were pushed into distress sales or worse - burning their crops. JP Patil, a farmer from Nanded says: ''When we had a bumper crop last year, we were forced to burn it down.''
• That year India produced 27 million tonnes of sugar. The domestic market needs just 22 tonnes.
• The glut pushed prices down by about 30%.
• Prices were down from Rs. 18 to Rs 13.

As an excess of 5 million tonnes piled up, the government allowed sugar mills to export in the international market, where prices were rising. The prices were rising because the biggest producer, Brazil, had cut down exports.

Thus, where the farmers lost money, sugar mill owners made a killing. Disillusioned, many farmers turned to other crops this year, resulting in a shortage of sugarcane.
Professor Sudhir Banwar of Lucknow University says: ''The decision to export helped only the mill owners. This created a lot disincentive as a result of which the sugarcane farmers switched to other crops this year.''

As farmers moved away, sugarcane this year has seen a 30% drop in cultivation.
The government has its answers ready.

To the allegation that sugar exports till December 2007 and imports in January 2008 helped hoarders, the government points out that the world sugar prices were higher and India had a glut.

The second allegation is that the import of raw sugar in January led to hoarding but the goverment insists sugar imports were allowed long after the crushing season and so farmers were not affected.

Another allegation is that the decision to export sugar benefitted sugarcane mill owners but the government says this was done only after consulting manufacturers, farmers and sugar cooperatives.

And many allege that prices are shooting up because manufacturers are processing raw sugar and hoarding... The government says stock holdings and turnover limits have been imposed on sugar trade till 2010.