India: Effects of Tariffs and Nontariff Measures on U.S. ... - USITC

trend toward healthier eating, <strong>India</strong>n dem<strong>and</strong> for healthful oils, such as sunflower,
safflower, <strong>and</strong> palmolein, is rising.
Sugar
Production
Sugarcane is an extremely important cash crop in <strong>India</strong>. The production, pricing, <strong>and</strong>
international trade <strong>of</strong> sugarcane <strong>and</strong> sugar is highly regulated by the <strong>India</strong>n government.
Production, which stood at 348.2 mmt <strong>of</strong> sugarcane <strong>and</strong> 28.6 mmt <strong>of</strong> sugar in MY
2007/08, has grown dramatically over the years because <strong>of</strong> the central government’s
planned growth in the sector, which included the development <strong>of</strong> central/state
government extension services, increased support prices, <strong>and</strong> increased use <strong>of</strong> irrigation. 43
Favorable government policies, as well as favorable weather, have led to a steady
increase in planted area, which in MY 2007/08 reached 5.0 million ha.
<strong>India</strong>n sugarcane <strong>and</strong> sugar production generally follows a six- to eight-year cycle,
whereby three to four years <strong>of</strong> high production, with corresponding high stocks <strong>and</strong> low
prices, is usually followed by two to three years <strong>of</strong> lower production. High sugarcane
production during MY 1999/2000–2002/03 was followed by marked drops in production
during MY 2003/04–2004/05. 44 The next upswing, aided by increased planted area,
resulted in record sugar production in MY 2005/06 <strong>and</strong> converted <strong>India</strong> into a net sugar
exporter for the first time. Another year <strong>of</strong> record production followed in MY 2006/07,
which led again to cyclical oversupply, low prices, <strong>and</strong> a distressed situation for farmers.
Delayed cane price payments by the mills to growers in key growing regions <strong>and</strong>
relatively higher prices for food grains shifted growing area out <strong>of</strong> cane in MY 2007/08.
Delayed payments also caused farmers to use less fertilizer, pesticides, <strong>and</strong> irrigation
water, resulting in lower yields. 45
The <strong>India</strong>n sugar milling sector consists <strong>of</strong> several hundred sugar mills, about one-half <strong>of</strong>
which, accounting for 56 percent <strong>of</strong> processing capacity in 2007, were organized as
farmer cooperatives. The remainder is processed by private <strong>and</strong> public sector mills. 46 The
sugar milling industry is concentrated in Maharastra <strong>and</strong> Uttar Pradesh.
43 FAO, “Factors Determining <strong>India</strong>n Sugar Production,” October, 1997, 29–31.
44 Singh, <strong>India</strong>: Sugar, Semi-Annual 2008, October 6, 2008, 4.
45 Ibid.
46 Government <strong>of</strong> <strong>India</strong>, Agriculture Division Planning Commission, Report <strong>of</strong> the Working Group on
Agriculture Marketing Infrastructure <strong>and</strong> Policy Required for Internal <strong>and</strong> External Trade for the XI Five
Year Plan 2007–12, January 2007, 27.
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