A poor sugarcane crop in India, the
world’s second-largest producer, is hurting consumers and farmers — plus
undermining the country’s energy security goals.
·
Global
Sugar Prices Rise:
Global sugar prices have increased nearly 15% year-on-year, driven by extreme heat
and drought affecting sugarcane in Brazil and sugar beet crops in Europe,
according to the UN Food and Agriculture Organization.
·
India
Faces Supply Concerns:
India, the world’s largest sugar consumer and second-largest producer, faces a
potential decline in sugarcane output following a weak monsoon and El
Niño-related drought.
·
Imports
to Meet Domestic Demand: India
has opened its market to sugar imports this year, an unusual move for a country
that normally exports sugar, adding pressure to global prices.
·
Farmers
Suffer Heavy Losses:
Sugarcane farmers in Maharashtra’s Marathwada region face severe crop damage,
rising input costs and mounting debt. Some farmers expect yields to fall by
50–75%, while others have abandoned their crops.
·
Impact
on Food Prices:
Rising sugar prices have increased the cost of traditional Indian sweets by
around 10% in some markets during the Hindu festival season, forcing consumers
to reduce purchases.
·
Threat
to Ethanol Programme:
Sugarcane is an important feedstock for India’s ethanol-blending programme,
which aims to reduce crude oil imports, conserve foreign exchange and lower
emissions.
·
Higher
Dependence on Alternative Feedstocks:
Declining sugarcane availability is forcing greater reliance on corn and rice
for ethanol production, although these crops are also vulnerable to heat and
drought.
·
Fuel-Efficiency
Concerns:
Motorists have complained that petrol containing 20% ethanol reduces fuel
efficiency, particularly in older vehicles. The government has acknowledged a
limited impact on mileage while stating that there is no evidence of widespread
engine failure.
·
Water
Scarcity Worsens:
Sugarcane’s high water requirements are intensifying
pressure on groundwater resources. In parts of Marathwada, wells and reservoirs
have dried up despite substantial investments by farmers in irrigation.
·
Government
Warns Against Hoarding:
Authorities and the National Federation of Cooperative Sugar Factories have
cautioned traders against hoarding and excessive stocking, amid concerns about
rising prices.
·
Multiple
Economic Pressures:
Extreme weather, geopolitical conflict, high energy costs and India’s
dependence on imported crude oil are increasing pressure on agricultural
production, food prices and supply chains.
Key
Takeaway:
Climate change, El Niño and geopolitical disruptions are driving up global
sugar prices and threatening Indian sugarcane production. The crisis highlights
the challenge of balancing affordable food, farmers’ incomes, water
sustainability and India’s ethanol-based energy security strategy.
Conflict.
Climate change. A withering El Niño. All are conspiring to spoil the world’s
sweet tooth.
Global
sugar prices have soared, as a hot, dry summer scorched much of the
sugar-producing parts of the world, nudging overall food prices upward.
Nowhere
is that felt as acutely as it is in India, the biggest sugar consumer in the
world and the second-biggest producer. The worst monsoon in 11 years and fears
of a poor sugarcane harvest have spiked prices amid the Hindu festival season,
when gods and mortals alike are feted with sweets.
Making
matters worse, high sugar prices are also complicating India’s energy security
goals. Sugarcane is a key crop for the country’s biofuels push, all the more so
as India seeks to curb oil imports while the waterways of the Middle East are
choked by war.
This
year’s El Niño — a recurring natural phenomenon that scrambles weather around
the world — has left many of the country’s sugarcane fields parched, just a
year after they were drenched by excess rains and devoured by pests.
Protests
have broken out over rising prices. The government has warned sugar traders
against hoarding. And a country that usually exports sugar has taken the
extraordinary step of opening the doors to imports this year, further raising
global sugar prices.
“This
crop is gone,” Morarji Patil, a 30-year-old farmer, said as he stood beside his
cane field one sweaty September morning in the Marathwada region of western
India.
Like
other farmers here, Mr. Patil was already crushed by debt and high fertilizer
prices before the blistering heat and scant rains. His cane stalks were thin
and short, stunted by a lack of water this summer when they needed it most. Mr.
Patil expected his yields to be 70 percent lower than normal.
The
bank repossessed his tractor because of unpaid loans. His neighbors
watched it happen. Mr. Patil swallowed insecticide in a bid to end his life,
only to be rescued by his family and rushed to a hospital.
“I
was overwhelmed,” he said.
Then
came the medical bills. He borrowed more money to pay them.
India
represents an object lesson on the far-reaching effects of conflict and extreme
weather on a nation’s economy. Food prices are rising month by month. Key crops
remain at risk as the long tail of El Niño drags out through next year,
heightening the likelihood of extreme drought and flood. On top of that, India
is extremely vulnerable to global oil supply shocks. It imports the vast
majority of its crude oil.
“We
have a wall of costs building,” said Lavanya Venkateswaran, an economist at the
Singapore-based OCBC Bank, who concluded in a recent report that El Niño could
hit India particularly hard. “There are so many pressures now, it begs the
question — how resilient can supply chains actually be?”
It’s
not just India. Extraordinary heat and drought this year have hit sugarcane in
Brazil, the world’s biggest sugar producer, and sugar beets in Europe. Global
sugar prices are nearly 15 percent higher than they were a year ago, the U.N.
Food and Agriculture Organization said this month.
Sugar as Fuel
In
India, sugar has long enjoyed state support, including guaranteed prices for
farmers and, until this year, high import duties. Most recently, the industry
profited from a government directive that made 20-percent ethanol blends the
standard fuel at Indian gas stations. The government said its biofuels push
reduced oil demand and climate pollution, while also saving the country’s
precious foreign exchange. It called ethanol blends “a key pillar of India’s
energy transition.”
It
offered sugar refineries an additional source of revenue.
It
also infuriated Indian drivers.
They
complained that ethanol saps fuel efficiency and damages vehicles, especially
older ones with engines that are incompatible with a fuel blend containing 20
percent ethanol.
Aditya
Kare, 21, was refueling his 2018 Hero motorcycle at a
gas station in the nearby city of Latur. He said the ethanol blend had reduced
his average mileage from 60 kilometers per liter to around 45, and he was having a hard time making do
with the 100 rupees, a little more than $1, that his parents gave him for his
commute to college. “At home, we are planning to get an electric bike,” he
said.
Trying
to staunch public discontent, government officials said in a statement in July
that there was no evidence of a “widespread pattern of engine failure,” but
acknowledged that there was a “small” impact on fuel efficiency.
High
sugar prices are forcing the country to rely more on corn and rice to produce
ethanol. Those crops, too, are affected by heat and drought, both because of
climate change and this year’s El Niño. By late September, as the monsoon
receded, roughly half of India was under abnormally dry to exceptional drought
conditions, according to the India Drought Monitor, an independent tracking
site run by academics.
Sugar’s Allure
Drive
through Marathwada, where Mr. Patil farms, and you pass rows of sugarcane sown
between soybean, cotton and, increasingly, tall white turbines drawing power
from the wind.
Sugarcane
comes with a high cost. It is a thirsty crop, and its demand, for both food and
fuel, is forcing many farmers to drill deeper for water and drain local
aquifers.
Mr.
Patil’s well goes down 800 feet. This year, even at that depth, there is no
water.
A
dam on the Manjara River has become a dry ditch.
Ponds are bare.
“This
environment is not good for sugarcane,” said Ganesh Gomare, a farmer. “But the
economy of Marathwada is dependent on sugarcane.”
Sugar
is tempting. It enjoys relatively high profits. There are sugar mills nearby.
So Mr. Gomare, 38, devoted more of his land to
sugarcane this year.
It
backfired. He expects his yields to be half of normal.
Nearby,
Dagdu Venkat Rao Padile, 66, uprooted a stalk of
sugarcane from his field. The nodes were far shorter than they should be just
weeks before harvest. The plant was emaciated. Its sugar content would be
paltry. “It will cost me more to cut it than what I’ll get for it,” Mr. Padile said.
His
yields would be one-fourth of normal, he reckoned. The rains were so poor that
he had left most of his land fallow.
Manoj
Shembade Patil was in worse straits. He had mortgaged
his wife’s gold to plant sugarcane this year. By August, he had ripped it out
and borrowed more money to plant soybeans. In mid-September, the soil was as
dry as dust. “If there’s no rain in the next four days, this will die too,” he
said.
He
had little hope of earning back his wife’s gold.
Sweets Season
Faced
with panic over rising sugar prices, the National Federation of Cooperative
Sugar Factories recently warned against “panic buying or excessive stocking.”
There was still plenty of sugar in India, it said.
That
was little solace to shoppers in line at Gurukrupa Farsan Mart in Chhatrapati Sambhajinagar,
the city formerly known as Aurangabad, on a recent Friday evening. Prices were
up by 10 percent on everything on the racks, from the tiny dumpling-like modaks to the buttery globes of laddoos
beloved during the Hindu festival season. Customers were buying less of
everything, said the shop’s manager, Ganpath Mhaske.
“Prices
of food and fuel have gone up, too. They have to choose what to spend on,” he
said.
Tanisha
Gaikwad had all but cut sugar from her diet. But she joined the line at the
sweet shop for a small box of laddoos to offer at the
altar for Mahalaxmi, a goddess of wealth and power. Her prayers, she said,
could not be sugar-free.