LATUR, India — Conflict. Climate change. A withering El Nino. 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 Nino — 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, 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. Patil expected his yields to be 70% lower than normal.
The bank repossessed his tractor because of unpaid loans. His neighbors watched it happen. 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 Nino 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 Nino 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% 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% 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 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% 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 Nino. 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 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.
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 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,” Padile said.
His yields would be one-quarter 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% 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.
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