Interesting situation on the Indian sugar market
India is the second largest producer of sugar globally. However, the provision of sugar on the market is not tantamount to market success. Effective search of new markets is also required.
Problems on the global markets
International Sugar Organization forecasts that the total oversupply of sugar in 2014/15 season will reach about 1.3 million tonnes. At present global prices of this product are low, which has a particular impact on the situation of Indian farmers who sell cane sugar to refineries. The unfavorable situation on the markets makes the exportation of the product unprofitable unless state subsidies are available.
Subsidies fuel production
In 2013/2014 season, the South Asian states sold 2.2 million tonnes of sugar in total. This includes 1.2 million tonnes of Indian sugar, 700 thousand tonnes out of which was exported thanks to Indian government subsidies. If the state ceases to be able to subsidize exportation, due to internal or international situation, India’s direct competitors, such as Brazil or Thailand, will surely take advantage of the situation.
The bitter question of sugar
Deceasing prices aggravate the poor situation of Indian farmers, who risk their enterprises going bankrupt if they sell below the production cost. The only solution which could protect the Indian market is raising taxes on the imported sugar. However, action needs to be taken immediately, as the workers who have been asked to take a leave due to production stoppages may soon have no jobs to return to.