Sweet Nothing

New Delhi, Aug. 6: Here’s the bitter truth: sugar prices in the country are expected to soar in line with global trends.

Poor rains in Maharashtra and Uttar Pradesh could mean problems for cane farmers and sugar mills. Sugar production this year is about 6 million tonnes, well below last year’s level.

A recent World Trade Organisation (WTO) ruling against European export subsidies could see global prices going up by about 10 per cent. This means imported sugar, which one would be forced to buy to make up for the domestic shortfall, will be costlier.

On the other hand, Indian sugar mills have lost their incentives for exports as high domestic prices offer more in terms of extra profits. Such a trend is expected to gain even more ground with the WTO ruling.

Prices could soar by as much as 10 per cent in some of the world markets.

Internationally, the cut in subsidies by European countries has been hailed by major sugar producing countries of Australia, Thailand and Brazil. The preliminary WTO ruling is confidential and a final ruling would be issued in September after both sides have time to comment on it. However, final rulings do not normally differ from preliminary ones.

The WTO order is a fallout of the accusations by the three big producers of sugar — Australia, Thailand and Brazil — that the European Union was breaking trade rules with unfair export subsidies. These countries had said the EU countries would have to sharply slash their exports if the preliminary ruling is made final.