A country that was a net importer of sugar last year

A country that was a net importer of sugar last year (Indian Sugar Exim Corporation estimates), is still strictly dependent on monsoons for meeting its sugar demand, and this creates massively unstable price demand fluctuations, due to farmers’ tendencies to produce more than required in good times. According to Nayak, “When production of sugar increases, demand supply disequilibrium reduces prices, thereby dissuading farmers from sugarcane production,... which in turn, reduces the supply of sugarcane, the implications of which... again increases prices & subsequently increasing supply.”

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Source:- IIPM Editorial, 2006

Editor:- Prof. Arindam Chaudhuri