The Sugar Buzz in India

There's been a heaping amount of talk over sugar sales in India over the past week and none of it too sweet.

At present, Indian sugar farmers feel the government has fixed too low a minimum price for sugar cane.

In reponse, sugar farmers have rallied in protest at state capitals and have halted sugar cane sales to millers.

The obvious direct results are the crippled production of final sugar product and a dramatic supply and demand imbalance.

To entice Indian sugar growers to sell more sugar cane, Indian sugar mills have volunteered more money to farmers.

Some farmers have accepted and sold sugar supply to mills.

According to Reuters, 47 out of 91 private mills in the state of Uttar Pradesh have started crushing, and almost all are expected to crush by the end of the month.

Still others, who see this as an opportunity to make more profits, are holding on tight.

One example is the farmers' group Kisan Jagriti Manch, which was recently offered 190-195 rupees ($4.1-$4.2) for 100 kg of sugar cane by the Uttar Pradesh Sugar Mills Association, more than 25 rupees (15%) over the state-set price.

Sudhir Kumar Panwar, head of the group, contends that the farmers deserve more (at least 215 rupees) and recently met with government officials and milling organizations to represent sugar cane farmers and their demands.

This (ahem... fabricated) sugar shortage in India has contributed to the major escalation in sugar futures (NYSE) over the past few months (the highest in over 28 years), as well as, disparity between the growers and the millers in India.

Needless to say, when and at what price these farmers decide to sell is of critical importance for the success of India's sugar economy.

If the farmers don't accept a price to sell their sugar cane, India will be forced to import more sugar next year due to the resultant delays in production. (Why am I thinking about building a card castle right now?)

So, while India works this out, perhaps now is a good opportunity to focus on a different aspect of the situation; the surging population (and its resultant worldwide sugar demands) presents great investment opportunity for wholesale sugar sales in the US.

Forward thinking tells us that companies involved in wholesale sugar sales, wholesale food ingredients, chemicals and fertilizers for sugar crops, and sugar milling equipment/manufacturing supplies are likely to see growth over the next decade.

In addition, food preservatives and additives and other food ingredients may reap some benefits as well.