India in the grip of a sugar crisis

By Sanjoy Majumder
BBC News, Delhi

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Sugar canes are half the size they should be due to lack of rain

India, the world's largest consumer of sugar, is facing a crisis because of a massive fall in domestic production and a sharp increase in the price of raw sugar worldwide.

The timing could not have been worse - at the onset of the festival season which is a time when the demand for sugar peaks.

It's led to concern all round - for farmers struggling with a weak output, for ordinary Indians who are having to fork out more for their purchases to the owners of traditional sweet shops.

Nathu's is one of Delhi's oldest and most renowned confectioners. At their oldest branch located in a busy neighbourhood market in the heart of the capital, there is initially little evidence of a downturn.

Queues of people snake around the glass cases displaying a formidable array of sweets - from brown, round gulab jamuns to squares and triangles of milk-based sweets in a myriad of colours.

'Sweet tooth'

Harried shop assistants take down the shouted orders from behind the counters, delve into its depths to pick out the pieces and quickly pack them into boxes to be taken away.

"What can we do, everyone in my family has a sweet tooth," says one middle-aged lady, laughing as she walks away with several boxes.

"We simply cannot do without something sweet at the end of our meal."

But that fondness for sugar is now making a major dent in household expenses.

Delhi journalist Gargi Parsai on the impact of a lack of sugar

"We used to buy sugar at 25 rupees ($0.5) a kilo but it's already about 35 rupees ($0.72) and going up all the time," says another customer.

"It's bad news for the sweet-shop owners as well.

"We're being forced to raise the prices of our sweets but it's not enough to cover the increase," says manager Harsha Kumar.

"We can't raise it any more because than the customers will complain and stop buying."

Sugar, however, is more than just a luxury in India.

Just walk into any little teashop by the side of the road in any part of the country, and you'll find a man brewing strong milky tea in a blackened saucepan and then tossing fistfuls of sugar to produce a syrupy sweet brew.

"For some 60 million Indians who are the poorest of the poor, this sweet syrupy tea is their main source of carbohydrate," explains Gargi Parsai, a journalist of the Hindu newspaper who studies agricultural commodities.

"It's what keeps them going. So it's actually a staple just as rice and lentils are."

Low production

To get a sense of what's gone wrong this year you only have to drive a few hours north-east of Delhi into the green, fertile plains of Uttar Pradesh and one of the country's major sugar producing belts.

In Baghpat district the cane farms are plenty and, at first glance, bountiful.

Tall stalks of sugarcane sway gracefully in the breeze on either side of the road as men and women work in the fields, preparing for the next harvest.

But local farmers say the height of the cane is half as high as they should be.

Sugar is used extensively in food and beverages

"The lack of rain this year has been really tough on us," says farmer Pravin Kumar.

"Production is down by 40%."

The output has also suffered because of a decision by many farmers such as Mr Kumar in the past two years to gradually switch from sugarcane farming to other more lucrative crops.

"We're guaranteed better rates for rice than for sugar," he says. "So, many of us switched," he says with a shrug, pointing to a freshly planted rice crop right next to his sugarcane patch.

At the back of the fields looms the steel-grey sugar mill where the cane is processed and converted into sugar crystals.

Inside a cavernous warehouse, hessian sacks packed tight with sugar are stacked up against a wall - some 50,000 in all.

"That's less than half the capacity," the foreman tells me, as he directs porters who carry backloads of sacks into a waiting truck to be driven to markets across the region.

'Worried'

India produces the most sugar after Brazil. Now its poor output coupled with its growing demand is one of the reasons that global prices have shot up to their highest level in nearly three decades.

Gargi Parsai says that commodity traders around the world had anticipated India's need to import sugar this year, leading to increased speculation which drove up prices.

"Traditionally, whenever India goes to the global markets to buy sugar, prices shoot up as we've seen this year. Whenever India is in the market to sell sugar, the prices fall."

So while some people stand to make money off India's need for sugar this year, people here are worried about whether they'll have to make do without their daily dose.

With the Muslim holy month of Ramadan underway and the Hindu festival of lights around the corner, it's threatening to dampen the mood.