The Recent Sugar Price Issue – Some Thoughts

The extreme hike in sugar price (almost Rs. 50 per kg) had become a hot topic of discussion for the Indian mass for the last few days. Everybody was shocked, upset, and (understandably) angry. Thank god that at last the price of this widely consumed food item is showing some downward trend.


I feel instead of focusing on exchange of criticisms and blame game, we should now focus on how we can prevent the emergence of such situations in the future. Taking preventive measures to prevent future crisis is more important than identifying the “culprits” of present crisis and criticizing them for their failure. Right?

So do I have any suggestion? Yes, I do, though I am not sure about its practicability. And I also do not know whether any decision to this effect has already been taken or being considered. All I can say is that I have a suggestion, and I will love to share it with everybody.

Other day in TV I found they were saying that a particular strategy of the Agriculture Ministry has largely contributed to this sugar price crisis. And that strategy is – Export when there is surplus quantity, Import when there is scarcity. (Well, I do not remember the language ad verbatim, but it was something like that).

Now, when there is a surplus quantity of a food item, then exporting a part of it is not a bad idea. After all, it is always a great idea to tap an opportunity to draw foreign exchange.

However, at the same time the Government should remember that there can anytime be an emergency situation in the country, which will result in a sudden and emergency demand for that surplus quantity in India itself. For example, there can be a drought-generated famine in a certain region of India, resulting in an overnight creation of a sea of hungry people in an acute need of food items, including that particular food item. Similarly, there can be flood in one region, with the Government facing the task of sending relief to that place. Needless to say that the relief items must include food items, including that particular food item.


Now my humble suggestion -

Therefore, I feel that whenever there is a surplus production of a particular food item, the Government must store a certain percentage of it as the Buffer Stock. And this must be made a regular practice, irrespective of how strong or faint the possibility of an emergency situation is.

Now, if there is any situation like drought-generated famine, then the Government can use the buffer stock to address the acute need of food items in the affected region.

In case there is a flood in a region, the Government can send adequate food items by using that buffer stock.

And when a food item will suffer from constant price rise due to the scarcity of that item in the market, the Government can check that price rise by reducing that scarcity. Yes, by supplying that food item into the market from its buffer stock.


So, what do you people think of my plan?