Sugar production to fall 9.8% in FY13: CMIE

Besides, the production of soybean and mustard oil, is expected to fall in FY13

Centre for Monitoring Indian Economy (CMIE) has said the production of sugar will fall by 9.8% in the current fiscal due to lower availability of sugarcane.

CMIE, which has forecast 18% growth in sugar production in FY 12, observed that the fall in fiscal 2012-13 is due to shrinkage of area under sugarcane production.

"Area under sugarcane will shrink as farmers turn to alternative crops following mounting cane arrears in 2011-12," CMIE said in its monthly report here.

As a result, the production of food products and beverages, in which sugar is a major raw material, will see a minimal growth of only 0.5% in FY13 after estimated to have grown by a healthy 15.8 percent in 2011-12, it said.

With a fall in the domestic sugar production, output of molasses will also fall, which is expected to pull down the output of industrial alcohol, it said.

"We expect output of manufactured food products and beverages to remain almost flat in FY13. This will be essentially on the account of supply constraints, mainly of sugar," CMIE said.

Besides, the production of soybean and mustard oil, which too are the key ingredients in food products and beverages, is expected to fall in FY13.

"Lower production of soybean and mustard seeds in the domestic market and ban on import of oil seeds is expected to result in low oil production," the report added.

However, output of other manufactured food products and beverages is expected to rise in the year.

"We expect output of biscuits, instant food mixes, milk powder, beer, IMFL (Indian made foreign liquor) and aerated water and soft drinks to rise by around 2-8% in the FY 13," CMIE said.