The country’s sugar production is set to exceed domestic consumption for the third consecutive year in 2012-13 season starting October. This is despite a lower crop in Maharashtra and Karnataka, where dry spells triggered by poor rain in early part of the monsoon, hurt the standing cane crop.
The loss in these two States, which contributed to around 45 per cent of the country’s total output, is largely made up by Uttar Pradesh, where farmers – buoyed by higher returns last year – have planted cane on an additional area of 2.2 lakh hectares.
Moreover, the sharp decline in cane arrears has aided the trend. The overall cane acreage is higher by 4.5 per cent at 52.88 lakh hectares than last year’s 50.63 lakh hectares. Though the rains have recovered in late August, the damage triggered by dry spells is unlikely to be neutralized.
Despite a decline in output, the industry expects the surplus for exports to be around 1.5 million tonnes against 4 million tonnes last year. The higher surplus coupled with rise in output kept Indian exporters active in the global markets, with shipments touching about 3.5 million during 2011-12 season.
The opening balance at the beginning of 2012-13 season is pegged at 6 million tonnes, marginally lower than last year’s 5.5 million tonnes. The third successive year, where production has been higher than consumption, points towards a stabilizing trend in the sugar industry.
The bullish trend in sugar prices, which the millers are comfortable with should possibly help them break the cycle. The uncertainty in Maharashtra crop sparked a rally in prices, which are now in the Rs 33-35 a kg at the ex-factory level, against Rs 28-29 the previous year. The prices are expected to remain firm going forward on strong demand, which is growing over 2.2 per cent annually.
The consumption in 2011-12 is estimated at 22 million tonnes. The firm trend should augur well for millers helping them pare their losses. In Maharashtra, the output according to ISMA’s estimates is at 6.5 million tonnes, down from 8.95 million tonnes last year.
The dry spells did force the farmers to divert cane to fodder and ISMA estimates that up to 3.5 million tonnes cane was diverted to fodder since May. The cane area reported by the State stood at 9.04 lakh hectares in August (10.25 lakh hectares).
In Karnataka, ISMA estimates a 21 per cent decline in output at 3 million tonnes (3.8 million tonnes). The cane area in the State has dropped by 2 per cent and the sugar recovery will be hit as scanty rain has affected the crop.
However, production in Uttar Pradesh is expected to be 13.27 per cent higher at 7.9 million tonnes on good rains helping yields and recovery.
UP produced 6.97 lakh tonnes of the sweetener last year. Meanwhile, in Andhra Pradesh, sugarcane area will be 10-20 per cent lower than the normal area of 2 lakh hectares. Multiple factors have led to this situation.
While farmers in some areas shifted to maize and soya, those in the delta area feel that the cane coverage could be 75 per cent of the normal area.
Source: Hindu Business line
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