StatsGuru-15-April-13

India's bitter-sweet sugarcane story

THE SUGAR industry has been partially decontrolled, which means greater play for market factors. As Table 1 shows, the sector is capable of responding to price signals. The area under cultivation has fluctuated over five years; by 2011-12, it had returned to where it was in 2006-07. Table 2 shows that, in the meantime, the statutory minimum/fair and remunerative price for sugarcane, set by the government, has steadily increased, especially under the United Progressive Alliance. It has gone up particularly steeply of late, in response to the perceived fall in returns that led to a decrease in total area under cultivation, seen in Table 1. Several states have seen particularly high increases in their cane prices, set by state governments, in the past two years, as listed in Table 3. Uttar Pradesh, which has gone through a poll campaign in the period, stands out. Karnataka, Bihar and Maharashtra have also seen big increases. Perhaps that's why, as Table 4 shows, they have particularly large increases in the amount of land under cane cultivation. Maharashtra, short of water and undergoing drought, has almost a quarter additional land under water-intensive cane than it did in 2008-09. Table 5 shows that some other states have managed to decrease their sugarcane cropping - including Punjab, where farmers might be shifting to other lucrative vegetable crops in spite of increased state prices. Till price signals are allowed to function, without state intervention, cane will continue to be grown where it shouldn't be. Meanwhile, as Table 6 shows, the largest listed sugar producers are not all making the sort of returns they should.(Click here for tables)