The Centre proposes to amend the sugarcane control order and allow cane farmers to sell their cane to any sugar mill. The intention is obviously to get farmers a higher price. If farmers have a choice of buyers, they would sell to the highest bidder. But it is worth asking how much higher his bid would be. The truth is that for decades the government has limited competition between sugar mills by not allowing a mill to come up within a certain distance of an existing mill. If a mill is 25 kilometres away from another mill, it will be 12.5 kms from a farmer midway between the two. Since mills are not evenly distributed across the landscape, there will be farmers who are even further away from a mill. If the government is genuinely intent upon getting the farmer a higher price, net of transport costs, it should abolish licensing of sugar mills, and let mills come up where they will. More sugar mills may mean higher prices for some cane farmers. But they might also produce more sugar; and the more sugar there is, the lower its price. The government faces this problem already. Three years ago, the cane crop was so huge that sugar mills were working for eight months and milling cane that had little juice left in them. Sugar output was so large that the government had to force mills to stock it, and force banks to give them cheap loans. So much sugar was stuffed into the public distribution system that it was coming out of the poor consumers’ ears; they just did not want any more of it — at any rate, not at the ruling prices.
India eats much sugar, but could eat more — all it has to do is to make rosogolla its national sweet. But it cannot eat more sugar unless sugar is allowed to become cheaper. And if it gets cheaper, some sugar mills will turn turtle, or will pay a lower price to farmers, or both. It is not possible to make sugar mills compete for cane and to prevent them from competing for consumers; and competition generally means lower prices. This is a truth the government has refused to face since the Thirties. Ever since the first sugar mills came up, provincial governments have been meddling between millers and farmers, with disastrous results for both. After 75 years of failed policies, it is worth trying something different — namely dismantle all policies, and let the sugar market alone. Prices may fluctuate crazily in a free market, for sugar production is subject to a four-year cycle. It can be ameliorated by giving mills interest-free loans to build silos and store sugar. That is as much policy as is required.