Sugarcane and Sugar Production in India Typically follows a cyclical pattern, wherein 2 to 3 years of
higher production are followed by 3 to 4 years of lower production. India is expected to produce 24.5-
25.7 million tonne (MT) while the carry forward stock is 5.4 MT. The country consumes about 22 MT so
there is an 8 MT excess sugar of which 4 MT is to be stocked for next year consumption. The Central
Government has announced export quota of five lakh tones but it is yet to be implemented due to food
inflation rising up and cabinet secretary asks food ministry to refer the issue of exports to the
empowered group of ministers (eGOM), but no date has been fixed for the EGOM meeting yet. The
discretion on sending the issue to the EGOM was left to the food minister since there is no ban on
exports as such. However the food minister would find it difficult to go ahead with the decision will
expose him to blame sugar price rise later. This can delay the decision by a few days and it will be taken
on the basis of data on both prices and production provided by the ministry. The commerce department
has also opposed the export of 5 lakh tone of sugar proposed by food ministry as he said we don’t want
to face a situation where we forced to import.
There are global supply worries due to a drought in Brazil, the world’s largest sugar producer, and a
record rainfall in Australia. Maharashtra the Country’s biggest sugar producer, may miss its sugar
production estimate of 95 lakh tone for 2010-11 by at least five lakh tone due to drop in sugar recovery
and a likely decrease in cane production. The average sugar recovery in the state till January 3, 2011 is
less by 0.3% as compared to the same period of the previous year. Of the five lakh tone export quota
announced by the central government, Maharashtra mills have received clearance to export 2 lakh
tonne. There is a deficit of 10-12 million Tonnes of Sugar in Asia.
Sugarcane farmers of India Second largest state producer Uttar Pradesh may earn more in 2011-12 crop
year as the centre plans to raise the Fair and Remunerative Price (FRP) the floor price of cane fixed by
the Union Government of cane by ` 4 a quintal to ` 143 from ` 139. A delegation of Sugarcane
growers from UP said to Congress General Secretary Rahul Gandhi and demanded an increase in cane
support price to at least Rs 200 per quintal.
The government introduced 60% import duty with effect from January 1 after the end of a zero duty
period which was imposed in July 2009 to meet domestic production shortfall. The food ministry is also
considering a proposal to slash the import duty on the sweetener from the Current 60% to 20-30% by
March as domestic supply is projected to exceed demand for the first time in three years.
Sugar Futures are falling due to ample supply from mills, uncertainty for exports and sluggish demand
from retailers and bulk consumers like soft drink and ice-cream makers due to fall in temperature
against supply mainly puled down sugar prices.
India Sugar output may be 8.4 MN Tons 15% more from year earlier between Oct 1 – Jan 15. India to
review sugar supply situation next month, food Ministry Official says.
The gap between demand & supply is narrow, the export window is yet to be opened up, taking all
these factors together sugar prices in 2011 will remain exposed to market conditions.
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