TSI exclusive on how farmers and consumers will bleed as sugar companies make record profits. What is Sharad Pawar Doing? Niharika Patra, Rajan Prakash, Vikas Kumar, Aanchal Gupta and devdas matale try to find answers
It was the kind of morning where the biting breeze wafts
over and through your woollens like missiles seeking to smash their way through armour. The Sunday Indian was witness to a strange incident that freezing morning in Pagauda village in Western Uttar Pradesh. In the last week of January 2008, farmer Attar Singh simply set fire to his standing crop of sugarcane and fought desperately to rein in his tears. It is August 2009 and Attar Singh still has nightmares about sugarcane.Sugarcane and sugar mills have left a lifetime of bitter memories for Attar Singh and thousands of farmers.
Equally bitter is Vatsala Chaturvedi, a working wife in Kolkata who has seen sugar prices climb from Rs 15 a kg to Rs 18; then to Rs 20; then again to Rs 30 and now to Rs 35 as she and her family start preparing for the festive season that looms on the horizon. She and millions of consumers like her in India simply cannot fathom why sugar prices are rising so relentlessly. “My shopkeeper tells me that sugar might even cross Rs 70 a kg. I can’t recall ever paying even Rs 35. What in God’s name is happening,” she asks with an exasperated and almost resigned sigh of regret.
Attar Singh and Vatsala Chaturvedi live in a world that is completely different from the predator-infested jungle that is otherwise known as Dalal Street. As Attar weeps and Vatsala sighs, bulls in Dalal Street are rampaging for sugar shares like there is no tomorrow. In just a few months, the share price of Renuka Sugars has skyrocketed three times. During the same period, share prices of other sugar companies like Balrampur Chini and Shakti Sugar have pole vaulted by 185%. The buzz word in Dalal Street is: sugar stocks are - and will remain for a while - a goldmine for smart investors. And why not? Even if you are not a number crunching maven, the figures are astounding. Just a few days ago, Balrampur Chini announced results for the April-June quarter of 2009. Reported net profits are Rs 66.29 crore. In the same period in 2008, net profits were Rs 16.85 crore. That’s a jump of about 400%.
Any Indian citizen is surely entitled to ask a few questions: Nobody grudges high profits to companies; but why are they making consumers pay through their nose just when the festive season is opening? More importantly, if sugar companies are making such record profits, why are sugarcane farmers often staring at financial ruin and destitution? As suppliers of the raw material, aren’t they also entitled to enjoy a share of these ‘record’ profits? Most importantly, what in God’s name is the government doing? The question could be better framed as: What in God’s name is Union Agriculture, Food and Supplies Minister Sharad Pawar doing?
It was the kind of morning where the biting breeze wafts
over and through your woollens like missiles seeking to smash their way through armour. The Sunday Indian was witness to a strange incident that freezing morning in Pagauda village in Western Uttar Pradesh. In the last week of January 2008, farmer Attar Singh simply set fire to his standing crop of sugarcane and fought desperately to rein in his tears. It is August 2009 and Attar Singh still has nightmares about sugarcane.Sugarcane and sugar mills have left a lifetime of bitter memories for Attar Singh and thousands of farmers.Equally bitter is Vatsala Chaturvedi, a working wife in Kolkata who has seen sugar prices climb from Rs 15 a kg to Rs 18; then to Rs 20; then again to Rs 30 and now to Rs 35 as she and her family start preparing for the festive season that looms on the horizon. She and millions of consumers like her in India simply cannot fathom why sugar prices are rising so relentlessly. “My shopkeeper tells me that sugar might even cross Rs 70 a kg. I can’t recall ever paying even Rs 35. What in God’s name is happening,” she asks with an exasperated and almost resigned sigh of regret.
Attar Singh and Vatsala Chaturvedi live in a world that is completely different from the predator-infested jungle that is otherwise known as Dalal Street. As Attar weeps and Vatsala sighs, bulls in Dalal Street are rampaging for sugar shares like there is no tomorrow. In just a few months, the share price of Renuka Sugars has skyrocketed three times. During the same period, share prices of other sugar companies like Balrampur Chini and Shakti Sugar have pole vaulted by 185%. The buzz word in Dalal Street is: sugar stocks are - and will remain for a while - a goldmine for smart investors. And why not? Even if you are not a number crunching maven, the figures are astounding. Just a few days ago, Balrampur Chini announced results for the April-June quarter of 2009. Reported net profits are Rs 66.29 crore. In the same period in 2008, net profits were Rs 16.85 crore. That’s a jump of about 400%.
Any Indian citizen is surely entitled to ask a few questions: Nobody grudges high profits to companies; but why are they making consumers pay through their nose just when the festive season is opening? More importantly, if sugar companies are making such record profits, why are sugarcane farmers often staring at financial ruin and destitution? As suppliers of the raw material, aren’t they also entitled to enjoy a share of these ‘record’ profits? Most importantly, what in God’s name is the government doing? The question could be better framed as: What in God’s name is Union Agriculture, Food and Supplies Minister Sharad Pawar doing?
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Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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