Homework Title / No.

: Term Paper on Impact of increasing sugar prices on

sugar demand in India.
 TABLE OF CONTENT

 INTRODUCTION

 SUGAR PRICE

 DEMAND FACTOR – GLOBAL

 DEMAND FACTOR – INDIA

 RELATIVELY INELASTIC DEMAND CURVE

 GLOBAL PRODUCTION, SUPPLY

 SUGAR PRODUCTION AND SUPPLY IN INDIA

 FACTORS AFFECTING PRODUCTION

 THE BREAK-EVEN POINT

 SUGARCANE UTILIZATION

 SUGAR CONSUMPTION IN INDIA

 SUGAR EXPORT

 SUGAR PRODUCTION

 SUGAR MARKETS IN DISARRAY

 SUGAR IN THE NEXT CENTURY

Introduction:

India is the largest producer of sugar in the world. In terms of sugarcane

production, India and Brazil are almost equally placed. In India, out of the
total cane available for crushing, 45% goes for sugar production and 55%
for the production of ethanol directly from sugarcane juice. This gives the
sugar industry in Indial an additional flexibility to adjust its sugar
production keeping in view the sugar price in the international market as
nearly 40% of the sugar output is exported.

Sugar industry – Global:

India are the largest sugar producing countries followed by China, USA,
Thailand, Australia, Mexico, Pakistan, France and Germany. Global sugar
production increased from approximately 125.88 MMT in 1995-1996 to
149.4 MMT in 2002-2003 and then declined to 143.7 MMT in 2003-2004,
whereas consumption increased steadily from 118.1 MMT in 1995-1996 to
142.8 MMT in 2003-2004.

The world consumption is projected to grow to 160.7 MMT in 2010 and

176.1 MMT by 2015. According to ISO, the world sugar output is
forecasted to reach 145.0 MMT and consumption to reach 147.0 MMT in
2004-2005, resulting in a deficit of around 2 MMT in 2004-2005. Further,
since October 2003, nearly 5 MMT of surplus sugar are expected to have
been removed from the world sugar balance, reducing the stock/
consumption ratio to less than 42%.

SUGAR PRICE:

The Government has been following a dual pricing policy for sugar, under
which, a fixed percentage of the total production is to be necessarily sold by
the sugar mills to the Government or its nominees at a pre-determined price
referred to as "levy sugar". The sugar so collected is distributed to
consumers through Fair Price Shops under the public distribution system.
The balance sugar referred to as "free sale sugar" can be sold in the open
market. Free sale sugar is also regulated to some extent, by way of a release
mechanism, whereby the Government determines the quantum of sugar that
can be sold every month. This helps the Government maintain stability in
sugar prices, by regulating the supply of sugar based on the underlying
demand. Thus, the Government statutorily determines the price of levy
sugar, while the price for the free market sugar is market determined,
affected to some extent by the release mechanism. As per Tuteja Committee,
the Central Government decided, in February 2002, to dispense with the
release mechanism with effect from April 1, 2003. However, in March 2003,
it was decided to continue with the release mechanism up to September
2005 and to review the position in February, 2005. The Tuteja Committee
has also recommended that the Central Government may dispense with the
release mechanism for free sale sugar with effect from October 1, 2005
The levy imposed has reduced from 40% in the 1990s to 10% effective from
March 2002. The Tuteja Committee has also recommended continuing with
the 10% levy obligation level. The Committee has also recommended that
beyond the initial time limit, a maximum of 3 months may be permitted for
lifting of levy sugar by the Government, where after, the levy sugar quota
would automatically be converted into free sale sugar, without any recurring
levy obligation on this portion of levy sugar.

LEVY OBLIGATION OVER THE YEARS

Year Levy Sugar: Free sale sugar ratio

1996-1997 40:60
1997-1998 40:60
1998-1999 40:60
1999-2000 40:60
2000-2001 30:70 (wef. January 2000)
2001-2002 15:85 (wef. February 2001)
2002-2003 10:90 (wef. March 2002)
2003-2004 10:90
2004-2005 10:90

As can be seen from the table, while the gap between levy sugar prices and
free sale sugar prices had narrowed considerably until 2002-2003, it has
since widened due to high free sale sugar prices.

Historical Free sale sugar and Levy Sugar Prices

(Rs. / metric tonne)
DEMAND FACTORS – GLOBAL:

According to ISO, the world sugar output is forecasted to reach 145.0 MMT
and consumption to reach 147.0 MMT in 2004-2005, resulting in a deficit of
around 2 MMT in 2004-2005. Further, since October 2003, nearly 5 MMT
of surplus sugar are expected to have been removed from the world sugar
balance, reducing the stock/ consumption ratio to less than 42%.

The world consumption is projected to grow to 160.7 MMT (Million Metric

Tons) in 2010 and 176.1 MMT by 2015. According to ISO, the world sugar
output is forecasted to reach 145.0 MMT and consumption to reach 147.0
MMT in 2004-2005, resulting in a deficit of around 2 MMT in 2004-2005.
Further, since October 2003, nearly 5 MMT of surplus sugar are expected to
have been removed from the world sugar balance, reducing the stock/
consumption ratio to less than 42%.

The world's largest consumers of sugar are India, China, Brazil, USA,
Russia, Mexico, Pakistan, Indonesia, Germany and Egypt. According to
USDA Foreign Agriculture Service, the consumption of sugar in Asian
countries has increased at a faster rate, as a direct result of increasing
population, increasing per capita income and increased availability.
DOMESTIC CONSUMPTION FOR 2004-2005
(All units in MMT)

The Essential Commodities Act (ESA) was amended and the sugar release
mechanism was brought within the direct purview of the ESA. This will
bring discipline in the sugar release mechanism by making it legally
enforceable.
In the past, the Government permitted only small sized units of 1,250TCD
(TONS OF CANE) and 2,500 TCD. Expansions for 5,000 TCD and above
were discouraged. The industry has grown horizontally as a result of this.
The Government of India de-licensed sugar sector in August 1998
encouraging entrepreneurs to set up sugar mills without a license but at a
distance of 15kms away from existing factories. The de-licensing is
applicable not only for new capacity initiatives but also for expansion of
existing capacities.
The Government permitted futures trading in sugar and granted approval to
three Companies for setting up Futures Exchange. Consequently, certain
sugar Companies floated Public Limited Companies to cater to this new
segment. Futures trading will allow sugar companies to hedge and manage
their risk better.
The Government of Uttar Pradesh has issued a new UP Sugar Policy. The
UP Sugar Policy recognises the need to attract new private mills because the
Government sector and the Co-operative sector may not be able to put up
these mills due to constraints of funds. The incentive package under the UP
Sugar Policy includes capital subsidies, reimbursement of transportation
costs of sugar, etc.

Demand Factors:

The demand or in other words, the consumption of sugar is increasing and

the demand is being fulfilled by more production. Still, the price of sugar
has been elastic and rising steadily. Though, being a basic commodity,
price hike limit has been fixed time to time by the government. Otherwise,
sugar would have been directly influenced by little fluctuations in demand
and supply.

Main Production Centers:

In India, major sugarcane growing states are Uttar Pradesh, Maharashtra,

Karnataka, Gujarat, Tamil Nadu, and Andhra Pradesh. These six states
contribute more than 85% of total sugar production in the country; Uttar
Pradesh and Maharashtra together contribute more than 57% of total
production.

Sugarcane Production in India:

Sugarcane occupies about 2.7% of the total cultivated area (Source: ISMA
Website accessed on May 16, 2005) and it is one of the most important cash
crops in the country. The area under sugarcane has gradually increased over
the years mainly because of much larger diversion of land from other crops
to sugarcane by the farmers for economic reasons. The sugarcane area has,
however, declined in the year 2003-04 mainly due to drought and pest
attacks. Following table shows area under sugarcane farming and total can
production.

SUGARCANE AREA AND PRODUCTION

FROM 1980-1981 TO 2000-2001 & UPTO 2003-2004
 Area under sugarcane Sugarcane Production
Year
(Million hectares) (MMT)
1980-81 2.7 154.3
1990-91 3.7 241.1
1999-'00 4.2 299.2
2001-02 4.4 298.4
2002-03 4.3 281.6
2003-04 3.9 221.2
2004-05 3.7 201.9

Economics Overview on Demand (PRICE ELASTICITY):

Sugar as a necessity commodity is used by each and every individual. The
price elasticity for sugar is relatively inelastic demand. We can express it by
following graph:

P0
PRICE OF SUGAR

Q0 Q
QUANTITY OF SUGAR

The above relatively inelastic demand curve shows that with a more increase
in price of sugar the demand for the sugar is less affect. Because of necessity
good.
Global Production Supply:

Following table provides an overview of the production, supply and

distribution of sugar in the international market.

WORLD SUGAR PRODUCTION, SUPPLY, AND DISTRIBUTION

(September - August)
(All figures in '000 metric tons)
2000-
2003-2004 2002-2003 2001-2002 1999-2000
2001
Opening
69,327.3 62,040.0 62,063.3 62,223.6 57,611.7
Stocks
132,200.
Production 143,701.9 149,405.2 137,982.6 134,753.9
0
Imports 48,190.3 48,593.2 45,261.1 43,573.9 41,226.3
Exports 52,062.7 51,339.9 47,759.7 44,212.9 42,720.6
13,1721.
Consumption 142,766.9 139,371.1 135,507.3 128,647.7
2
Ending Stocks 66,389.9 69,327.3 62,040.0 62,063.3 62,223.6
Ending stocks as
% of 46.50% 49.74% 45.78% 47.12% 48.37%
consumption

According to ISO, the world sugar output is forecasted to reach 145.0

MMT and consumption to reach 147.0 MMT in 2004-2005, resulting in a
deficit of around 2 MMT in 2004-2005. Further, since October 2003, nearly
5 MMT of surplus sugar are expected to have been removed from the world
sugar balance, reducing the stock/ consumption ratio to less than 42.

Sugar Production and Supply In India:

The sugar industry in the country uses only sugarcane as input, hence sugar
Companies have been established in large sugarcane growing states like
Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamil Nadu, and Andhra
Pradesh. These six states contribute more than 85% of total sugar production
in the country; Uttar Pradesh and Maharashtra together contribute more than
57% of total production.
Following table shows the state-wise sugar production in India for 2002-
2003 and 2003-2004.

SUGAR PRODUCTION BY STATE IN INDIA (in MMT)

State 2002-2003 %of Total 2003-2004 % of Total
Uttar Pradesh 5.65 28.06% 4.55 33.60%
Maharashtra 6.22 30.86% 3.18 23.44%
Karnataka 1.87 9.28% 1.12 8.24%
Gujarat 1.25 6.22% 1.07 7.87%
Tamil Nadu 1.64 8.16% 0.92 6.80%
Andhra Pradesh 1.21 6.01% 0.89 6.54%
Haryana 0.64 3.16% 0.58 4.30%
Punjab 0.59 2.91% 0.39 2.88%
Uttaranchal 0.50 2.47% 0.39 2.86%
Bihar 0.41 2.03% 0.27 2.02%
Others 0.17 0.85% 0.20 1.46%
TOTAL 20.14 100.00% 13.55 100.00%

Indian sugar industry has grown horizontally with large number of small
sized sugar plants set up throughout the country as opposed to the
consolidation of capacity in the rest of the important sugar producing
countries, where greater emphasis has been laid on larger capacity of sugar
plants. The average sugarcane crushing capacity in India, Brazil and
Thailand is given below:

AVERAGE SUGARCANE CRUSHING CAPACITY

Country Avg. Capacity (TCD)
Thailand 10,300
Brazil 9,200
India 3,500

FACTORS AFFECTING PRODUCTION:

Sugarcane availability depends on:

Area under sugarcane cultivation: The area under cultivation of sugarcane in
the proximity of the mill determines the amount of sugarcane that can be
made available. Crop switching from sugarcane to other crops effectively
lowers the area under cultivation of sugarcane.

Climate and irrigation facilities: Sugarcane is a tropical crop which

requires adequate water and sunshine. In addition, monsoons can affect the
crop yield and quality of the crop. The state of UP is supplied water from the
Ganga, which along with its tributaries and associated canal system accounts
for 34% of the total river water available in the country. This available
perennial water reduces the state's reliance on seasonal monsoons.

Crop diseases and pests: Crop diseases affect both the quantity and
quality of sugarcane. Harvests have been impacted severely by insects and
pests (Eg. Wholly Aphid). Several sugar factories are currently investing in
research and development in the field of Entomology to control such pest
outbreaks.

Sugarcane yield: This is the total sugarcane output per hectare of land. It
depends upon several factors like climate, soil, variety of sugarcane, and
development measures undertaken by sugarcane farmers, agencies, co-
operatives, government, and sugar manufacturers. Agricultural engineering
and extension services, usually undertaken by individual sugar mills, have
played an important role in increasing sugarcane yields
Diversion of sugarcane to other products: The sugarcane producers may not
supply the sugarcane to a sugar manufacturer and divert the production to
other products like gur, and khandsari which are forms of crude sugar.

THE BREAK-EVEN POINT:

In its simplest form, the break-even chart is a graphical representation of
costs at various levels of activity shown on the same chart as the variation
of income (or sales, revenue) with the same variation in activity. The point
at which neither profit nor loss is made is known as the "break-even
point" and is represented on the chart below by the intersection of the two
lines:

`In the diagram above, the line OA represents the variation of income at
varying levels of production activity ("output"). OB represents the total
fixed costs in the business. As output increases, variable costs are incurred,
meaning that total costs (fixed + variable) also increase. At low levels of
output, Costs are greater than Income. At the point of intersection, P, costs
are exactly equal to income, and hence neither profit nor loss is made.
Sugarcane Utilization:

Not only has the sugarcane acreage and sugarcane production been
increasing, drawal of sugarcane by the sugar industry has also been
increasing over the years. In India sugarcane is utilised by sugar mills as
well as by traditional users like gur and khandsari producers.
In early 1980s, the proportion of sugarcane drawn by the sugar industry was
hovering around 35%, which went upto to 50% in 1990s and to as high as
69% in the year 2002-2003. The sudden growth in 2002-2003 can be
attributed to the fact that sugar prices in this year were very low and Gur and
Khandsari manufacturers could not effectively compete with the low sugar
prices.

In the year 2003-2004, percentage drawal of sugarcane, however, declined

due to rising sugar prices and more intense competition from the alternate
sweeteners - gur and khandsari.

Following table gives data on sugarcane utilization for different

purposes.

SUGARCANE UTILISATION
% Sugarcane utilisation for
White
Year Gur and khandsari Seed, feed and chewing
sugar
1980-1981 33.4 54.8 11.8
1990-1991 50.7 37.4 11.8
2000-2001 59.7 28.8 11.5
2001-2002 57.4 31.5 11.1
2002-2003 68.9 20.1 11.1
2003-2004 56.1 32.5 11.4

SUGAR CONSUMPTION IN INDIA:

Total Indian Consumption of sugar has grown at a Compounded Annual

Growth Rate of 3.6% from 14.7 MMT in 1997-1998 to 18.2 MMT in 2003-
2004.

Apart from white sugar, India also consumes alternate sweeteners - gur and
khandsari, which are placed at about 9 MMT per annum. Taking into
account all the 3 sweeteners i.e. white sugar, gur and khandsari, on a per
capita basis, Indian consumption is more than the world average (See the
table below). However, white sugar consumption is much lower than the
world average.

The consumption of white sugar in India is generally urban based. In rural

areas the alternate sweeteners gur and khandsari are consumed in larger
quantities. The consumption of sugar in urban areas in some of the Indian
states with higher GDP and income levels, matches favorably with various
developed countries. The highest per capita consumption of sugar is in the
states of Punjab and Haryana which are adjoining the sugar producing
region of western UP. As income levels and GDP rises, it can be expected
that there will be a gradual shift from consumption of alternate sweeteners to
white sugar. Also, as can be seen from the following table, the total per
capita consumption of sweeteners in urban India is higher than total India
average by around 5 kg per annum. This clearly implies that per capita
consumption of sweeteners in rural India is much lower. It can be expected
that this gap will close with increase in urbanization leading to a growth in
the total sweeteners market in India.

PER CAPITA CONSUMPTION OF SUGAR IN URBAN INDIA

States Kgs. Per annum
Punjab 71.5
Haryana 68.5
Maharashtra 40.9
Gujarat 40.9
Kerala 41.5
Uttar Pradesh 35.2
Tamil Nadu 29.1
Karnataka 23.3
All India 31.5

In India, the glut on the domestic market following the sharp rise in 1998/99
production did not stop importers bringing in huge amounts, given the
differential between world and domestic prices, and low import tariffs.
Following protests by the domestic industry, the government stepwise raised
the import duty. But imports continued because of the sharper fall in world
market prices.
Even Malaysia, the government of which took steps to control domestic
demand to stem the outflow of foreign exchange, kept imports at reasonable
levels. The same is true of South Korea, where net imports dipped only
slightly in 1998, while a modest rise is forecast for 1999.
In the Philippines, careful economic management, together with liberal
import rules to augment domestic supplies after the 1998/99 crop shortfall,
prevented a fall in sugar consumption. As a result, imports in 1998/99 were
noticeably above those of the previous year.
The very high support levels for sugar that form part of the stabilization
regime in Japan have for years impacted on that country's sugar
consumption and imports. While Japan has been affected by the economic
crisis in the Far East, the long-term declining trend of imports and demand
has hardly varied in the past two years.
The Chinese economy has remained largely untouched by the Asian
financial crisis, although GDP growth has slowed to single digits. But an
expected growth of more than 6 percent in 1999 can hardly be called a
disaster. What has affected China's demand growth is not so much the
slowdown of the economy but the large usage of high-intensity sweeteners,
mainly saccharin. And that has nothing to do with Far Eastern economic
problems.

CHART OF ASIAN SUGAR CONSUMPTION

Sugar Export:

Exports of sugar from the country have been de-canalized since 1997,
enabling sugar mills to undertake exports on their own and to compete
directly in the international market. Further, exports from a mill do not form
part of the quota under the market quota releasesystem.

Despite this, India has not been a consistent exporter of sugar in the past. It
has been exporting sugar occasionally in periods of sugar surpluses. In the
last five years it exported 4.07 MMT sugar. In these years, India had an
average exportable surplus of 6.23milliontonesevery year. As against this,
on an average, the sugar exported was only 0.81 MMT or 7.69% of the total
exportable surplus. This is primarily because domestic prices have remained
higher than international prices. However, should quotas for LOME / APEC
for India increase; there will be enough incentive for Indian manufacturers
to export.

EXPORTABLE SURPLUS, SUGAR STOCK & ACTUAL EXPORTS

Year Closing Exportable Actual % export of

Stock (MMT) surplus (MMT) Export surplus stocks
 (MMT)
1999-00 9.38 5.38 0.07 1.30
2000-01 10.4 6.4 1.2 18.75
2001-02 11.3 7.3 1.1 15.06
2002-03 11.6 7.6 1.5 19.73
2003-04 8.5 4.5 0.2 4.44
Average 10.23 6.23 0.81 7.69

Lax financial discipline forced Brazil to freely float the real from January
1999. Between March 1998 and March 1999, the real devalued by more than
60 percent, which greatly increased Brazil's competitiveness and the
attractiveness of the export market relative to the domestic market for the
country's sugar producers. The devaluation of the real has undoubtedly
drawn significantly more sugar into the international arena. To a large
extent, the devaluation cushioned the effect of the fall in world market
prices and helped Brazil to pump out enormous amounts of sugar, facilitated
by the diversion of cane from alcohol to sugar production. Greater
competitiveness and low freight rates made Brazilian sugar appear in
markets as far afield as South Korea, Malaysia and Indonesia. The growth of
Brazilian sugar exports must be regarded as one of the main factors behind
the fall in world prices.

Asian exporters have also contributed to weak prices, albeit to a far lesser
extent. Thailand's sugar industry was plunged into financial difficulties by
the country's economic problems and poor returns from the world market.
Many mills had to put sugar up as collateral against bank loans. The
creditors in turn were unwilling to release the sugar at rock-bottom prices,
which restricted legal exports in 1998/99, despite a recovery of production.

Following table provides an overview of the Import and Export of sugar in

the international market.
Net Sugar Imports/Exports - 1000 Tonnes, Raw value

Notwithstanding such gyrations, it cannot be denied that the structure of the

world market has changed and that today's price response differs markedly
from that before the mid-1980s. Without going into details, it is obvious that
one of the consequences of these changes is greater price stability than in the
past.

SUGAR IN THE NEXT CENTURY:

Looking towards the next century, we need have no fears about the future of
sugar demand. On any estimate of world population growth, a great deal
more sugar will be needed. Can the additional sugar be produced and which
countries will be the main suppliers?
Technological advances already under way in the areas of genetic
engineering; ground-based and satellite-borne sensor and positioning
systems for precision field and transport management; juice filtration;
combined heat and power generation and so on promise that the ever greater
productivity achieved in this century will continue in the next. The wide
range of unit sizes and performance still existing within most national sugar
industries, as well as between countries, indicates the vast production and
efficiency reserves not yet exploited. There will also be new developments
in the field of alternative sweeteners. These new products will contribute to
still the world's hunger for sweetness, but, at the same time, will impose a
ceiling on the price expectations sugar producers can entertain in the longer
run, without opening the gate to competitors.
Structural changes on the supply side are the daily bread of the market. At
the beginning of the 19th century, Jamaica was the world's leading sugar
exporter; at the end, it was Germany. From 1904 onwards, Cuba was for
decades firmly installed in first place. On the eve of the 21st century, Brazil
is the greatest sugar exporter.
There is circumstantial evidence that with the devaluation of the real Brazil
can make money, or at least break even, at 5-6 cents/lb. If true, this could
completely change the face of the supply side, unless the Brazilian cost
structure changes markedly for the worse. None of the other efficient
producers (Australia, Guatemala, and Thailand) are profitable at this price.
Brazil already controls 25 percent of the market and still has enormous
potential for expansion. In a few years, perhaps, the world sugar market will
mirror that for coffee, and adverse weather in Brazil will send shock waves
through the global sugar market.
Alongside the challenges posed by the ongoing process of liberalization, the
call to the world's sugar industries in the 21st century is to devise strategies
of sustainable development in order to avoid the dangers of an excessive
concentration of production and associated price fluctuations.

SUMMARY

 India is one of the largest producer of sugar in the world and so also
the consumer. Can manage its inventory to its advantage by rotating
the same through imports and exports.
 Agriculture growth pegged at 3.5% - sugar cane has to compete and
compete on its own.
 There exists a potential in terms of increase in productivity, extraction
and production.
 Like in the past planners/policy makers/farmers producers - should
get together to form a policy also acceptable to politicians.
 Optimistion of sugar mill capacity - vertical growth need of the day.
 Pricing
 Decontrol may not be the answer - at the same time dual pricing
policy has to go to provide level playing field for all sweeteners.
 Govt. can procure sugar from market and subsidies in case, it is a
must for PDS.
 For the good of consumer, farmer and the mills sugar price should
move in a band, meaning monthly inflow to market to be regulated by
Government.
 Balanced export/import policy.
 Mills and farmers to work together to improve yield and extraction
through better harvesting.
 To become internationally competitive - i.e. cost effective and quality
producer.
 To be ready for free marketing i.e. to hedge on futures.
 With consistent policy and competitiveness India can be a regular
player in the international market.
India sugar hits record high on demand, supply delay

3 Sep 2009, 1750 hrs IST, REUTERS

MUMBAI: Indian spot sugar prices jumped over 4 per cent to a fresh record peak on

Thursday buoyed by good retail demand and a delay in announcing

non-levy sugar quota for September, traders said. Depleting stockpile and firmness in
overseas markets also bolstered sentiments, they said.

In Kolhapur, a key market in top producer Maharashtra, the price of the most traded
S-variety sugar climbed 4.2 per cent to Rs 3,021.3 ($61.7) per 100 kg, breaching
earlier high of Rs 2,965 on August 11. The spot price had risen more than a quarter in
August, while in 2009 it has jumped more than 64 per cent.

"Prices rose as government delayed announcement of non-levy sugar quota. Millers

were not releasing stocks as they were not aware how much they can sell," said
Mukesh Kuvadia, secretary of Bombay Sugar Merchants Association.

Non-levy, or free sale sugar, is sold by millers in the open market, but the quantity
each mill can sell is fixed by the federal government on a monthly basis. In last week
of the month, the government usually announces quota for next month, but this month
it delayed announcement till Thursday evening.

The country released 1.83 million tonnes of non-levy sugar for September, up 9.6 per
cent compared to the previous month as the country is heading towards the peak
festive season, the government said in a statement on Thursday.

"Prices may rise by another 4-5 per cent this week. Quota is lower than market
expectations. Besides, household demand is robust due to new month's beginning and
festivals," Kuvadia said. Wholesale traders stock up on food articles in the last and
first week of the month to prepare for purchases by India's salaried middle class, who
buy in the first two weeks of the month after receiving wages.

The country's peak festival season runs from August to October, when demand for
sugar goes up as people consume more sweets and confectioneries. India's new sugar
season will begin with much lower stocks and production will be hit by lower sugar
recovery from cane after the failure of monsoon rains, Farm Minister Sharad Pawar
said on Tuesday.

Last week, the head of the National Federation of Cooperative Sugar Factories Ltd,
JB Patel, said India's opening stocks would be at 2.7 million tonnes, down three
quarters from 10 million tonnes on Oct 1, 2008. India has put stock limits for big
Demand outstrips supply on Nokia 3G phone

Tony Hallett sil

Published: 26 Feb 2004 11:50 GMT

Nokia handsets for use on the first 3G networks in Europe provided by

3 are in very strong demand, according to comments from the boss of
the continent's largest mobile retailer.

Charles Dunstone, Carphone Warehouse CEO, this morning said his

company cannot satisfy demand for Nokia 7600 terminals on 3 networks in
the UK and Sweden, which are units of Hutchison Whampoa.

Speaking at this week's 3GSM World Congress in Cannes, he said: "The

barrier to 3G has been handsets [size and performance]. We had high hopes
for sales but in reality sales [of the Nokia phones] have greatly exceeded our
expectations."

He went on to say that as they are manufactured in the Far East, there must
be "planes flying in to London and Stockholm to satisfy demand".

The 7600 is sold by Carphone Warehouse but not directly by 3, as it doesn't

support all the operator's services, most notably video calling. However,
there is clearly much greater demand than that for existing offerings from
Motorola and NEC, which customers have complained are too big, have low
battery life and generally are a step back from current GSM phones.

Dunstone was generally positive about progress in the mobile industry,

singling out the success of the Blackberry email device from RIM and
saying Apple's iPod may go down as a turning point. "It has begun the idea
that you download content," he said, and predicted phones may end up
doubling as iPod-like devices.

However, he criticised mobile content offerings, often in the form of

services such as Active from O2, Live! From Vodafone, OrangeWorld and
T-Mobile's T-Zones, saying content is often not exclusive or just too
expensive.
Speaking about channels such as CNN trying to charge for their news, he
said: "Everyone is too greedy. News is too freely available for people to
think they can charge €5 per month [for it]."

He added ringtones and games shouldn't be priced above €0.99 and MMS
photo messages not more than twice that of SMS.

"People don't understand the price elasticity," he said. "We're pretty unsophisticated.
Pricing seems to be set by accounts people, not those in sales or marketing."

Reference:
http://www.google.co.in/#hl=en&q=articles+on+high+sugar+prices&meta=&aq=f&
aqi=&aql=&oq=&gs_rfai=&fp=5bcb77e30ca73bbe
Managerial economics. By getika piyali ghosh.