Sugar protest forces parliament to shut

By Ratnajyoti Dutta

NEW DELHI (Reuters) - Tens of thousands of farmers from Uttar Pradesh protesting against low state-set sugarcane prices forced the adjournment of first day of parliament on Thursday, prompting the prime minister to consider changes in fixing cane prices.

Farmers from India's biggest cane producing state marched through central Delhi, causing traffic chaos. A farmer union representative said 50,000 demonstrators filled the streets, while authorities put the figure at half that.

The protests had an immediate effect, with Prime Minister Manmohan Singh saying there would be possible changes to the price mechanism after a meeting with Rahul Gandhi, general secretary of the Congress party.

The ruling Congress party asssured cane growers of Uttar Pradesh of "highest possible" cane price.

The protest, which was backed by opposition parties and unions, led the government on Thursday to discuss a compromise with the protesters, a sign of how difficult it may prove to reform heavily-regulated sectors such as sugar and insurance.

The protest, highlighting rural discontent over government policy, may delay cane crushing in Uttar Pradesh and further worsen shortages of sugar, forcing the country to import more supplies.

Shortages this year in India, the world's top consumer and second biggest producer, has already led to import contracts for 5 million tonnes of raw sugar and more 300,000 tonnes of white, pushing benchmark New York prices to nearly 29-year highs.

The federal government has given states greater autonomy in fixing sugarcane prices, one of India's biggest cash crops, in order to lift restrictions on the heavily regulated sugar sector.