Comments
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 (lh).
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 lh than last year’s 50.63 lh. Though the rains have recovered in late August, the damage triggered by dry spells is unlikely to be neutralised.
Crop estimates
Various estimates point towards a marginal fall in 2012-13 output. The Indian Sugar Mills Association (ISMA) has forecast an output of 24 million tonnes (mt), about 8 per cent lower than 26 mt in 2011-12. The National Federation of Cooperative Sugar Factory Ltd (NFCSF) expects the production to be marginally higher than ISMA’s estimates at 24.5 mt.
This is because NFCSF expects output in Maharashtra to be at 7 mt, a tad higher than ISMA’s projection of 6.5 mt. Last year, Maharashtra produced 8.95 mt.
The Food Ministry expects the likely output to be between 24 and 24.5 mt, but the estimates would be finalised by the end of this month.
Despite a decline in output, the industry expects the surplus for exports to be around 1.5 mt against 4 mt 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 rally in global prices triggered by uncertainty in Brazilian harvest did work to the advantage of Indian millers.
Price outlook
The opening balance at the beginning of 2012-13 season is pegged at 6 mt, marginally lower than last year’s 5.5 mt.
The third successive year, where production has been higher than consumption, points towards a stabilising 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 mt. The firm trend should augur well for millers helping them pare their losses.
Production
In Maharashtra, the output according to ISMA’s estimates is at 6.5 mt, down from 8.95 mt last year.
The dry spells did force the farmers to divert cane to fodder and ISMA estimates that up to 3.5 mt cane was diverted to fodder since May. The cane area reported by the State stood at 9.04 lh in August (10.25 lh).
In Karnataka, ISMA estimates a 21 per cent decline in output at 3 mt (3.8 mt). 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 mt on good rains helping yields and recovery.
UP produced 6.97 lakh tonnes of the sweetener last year.
AP scenario
Meanwhile, in Andhra Pradesh, sugarcane area will be 10-20 per cent lower than the normal area of 2 lh. 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.
Delta farmers are facing a peculiar problem this time. “With the Government deciding to not give water to farmers under the canal area, rats have attacked the standing crops (sugar cane here). We are worryied that this could cause severe losses this time,” a farmer told Business Line over phone.
>Vishwanath.kulkarni@thehindu.co.in
(with inputs from K.V. Kurmanath, Hyderabad)
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.