India is the world’s #2 sugar producer. Its sugar industry is also a royal mess.
In an effort to woo the nation’s sugar farmers, the government set an above-market price that Indian sugar mills were required to pay sugar farmers for raw sugar. As such, sugar farmers went into production overdrive, growing far more sugar than the nation could consume or export.
This surplus, naturally, resulted in sugar prices dropping even further, putting sugar mills in the position of being forced to pay farmers more for sugar than they could sell it for. As such, the government recently meddled in the market again, kicking in new subsidies to the mills in an effort to boost exports to a global market already swimming in sugar.
Alas, the problem is so bad, and the Indian sugar market so screwed up, that the government-fueled war between sugar growers and sugar mills has reached a fevered, bordering on violent, pitch. Consider this report from the Business-Standard last week…
A sugar baron from Uttar Pradesh recently decided to check into an upscale hospital in Delhi’s suburbs. Armed with a warrant on his name, cops from Uttar Pradesh had searched his farmhouse and office. To evade arrest, he would have to spend the night away from home, and the hospital, he thought, would be a sanctuary. The moment he reached the hospital, he found it swarming with policemen from the state – a political heavyweight had got admitted a short while ago. He fled the place.
Fear has gripped the sugar industry of Uttar Pradesh. Squeezed between high sugarcane prices mandated by the state government and falling sugar prices, the mills have run up massive arrears to farmers. Naturally, farmers are restive. Some mills allege their personnel – and their families – have been manhandled by the farmers. As sugar – as well as sugarcane – comes under the Essential Commodities Act, the state government is well within its powers to launch criminal proceedings if arrears are not paid, which can include arrest.
Indeed, one political party leader “suggested in the state assembly earlier this week that (sugar mill owners) should be taken into custody immediately, saying that once the mosquitoes attack them in the jail, their wives would come running with the money!”
This is the global “free market” that U.S. farmers are competing in.
Nobody likes the current U.S. sugar program of import limits and tariffs. However, until major sugar producing countries such as India stop finagling with their own sugar industries, it would be irresponsible for Congress to throw American sugar farmers to these wolves.
With or without the mosquitoes.