Discuss the various impacts of sugar sector in the country caused due to the collapse in global sugar prices. (200 Words)
Refer - The Indian Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 5 years
KEY POINTS
· All commodities have taken a demand hit from subdued economic activity and lockdowns imposed by many countries to combat the COVID-19 pandemic.
· One reason for this collapse is the closure of restaurants, weddings and other social functions not taking place, and people avoiding ice-creams and sweetened cold beverages that might cause throat infections.
· The impact of coronavirus-induced lockdowns on out-of-home consumption and institutional (as opposed to direct household) demand for sugar is obvious
· Sinking crude prices appear an even bigger factor. The juice from crushing sugarcane can be crystallised into sugar or fermented into alcohol.
How will this affect India?
· Dip in sugar consumption, together with higher Brazilian output, is bad news for both Indian sugar mills and cane farmers. Before COVID-19 happened, the Indian industry was expecting to export 5.5-6 mt of raw sugar in 2019-20.
· The current plunge in world prices, plus Brazil’s likely production surge, would upset these calculations.
What is the situation with respect to cane farmers?
· Exports slowing down and not much domestic lifting of sugar by institutional consumers has significantly undermined the ability of mills to make cane payments. Moreover, the industry’s problem is not from sugar alone. The lockdown has reduced offtake of alcohol, be it potable liquor or ethanol for blending with petrol.
Are other agri-commodities impacted?
· Prices of corn, which is also used for making ethanol, fell to their lowest since September 2009 .
· Corn prices can, in turn, drag down other cereals, just as palm oil could to soyabean and other oilseeds. They are all ultimately linked to oil, whose prices matter as much to petroleum companies as farmers.
