Sugar output may fall on delayed rains

The delayed monsoon this year could impact sugar output in Maharashtra, the country’s largest sugar producing state, by 5-6 per cent. Millers in Uttar Pradesh (UP), the second largest producing state, say a delay in monsoon beyond June could impact yield and recovery of sugarcane and lead to a lower than expected sugar production.

“The delay will impact both yield and recovery. Initially, we were expecting an output of 5.3 million tonnes for Maharashtra in 2009-10 season. Now it will perhaps go down to 5 million tonnes,” said Prakash Naiknavare, managing director of the Maharashtra State Co-operative Sugar Factories Federation. Monsoon has got delayed by two weeks in Maharashtra.

NOT SO JUICY

• Sugar output for current season is at a three-year low of 14.7 million tonnes, down by 44 per cent from previous season 
• The dip in output has driven prices to an all-time high. Ex-factory sugar prices in UP have jumped by nearly 50 per cent since the start of the season in October last year and currently rule around Rs 2,375-2,400 a quintal
• The shortage forced India to turn a net importer of sugar after a gap of three years

A similar situation could unfold in UP, which has not received rains so far. “This is the growth period for sugarcane crop. If it does not rain for the next ten days, we may get into a problem. The yield could decline by as much as 10-15 per cent. This will also delay the crushing season,” said Sanjay Tapriya, director (finance) at Simbhaoli Sugars, which owns three sugar mills in UP.

Arihant Jain, president (Finance) at Dhampur Sugars, said apart from impacting yield, a delay in monsoon beyond 10 days could affect recovery as well. Dhampur runs four sugar mills in UP.

The country’s sugar output in the current season (2008-09) is at a three-year low of 14.7 million tonnes and down about 44 per cent from the previous season. The annual demand is estimated at 22 million tonnes.

The dip in output has driven prices to an all-time high. Ex-factory sugar prices in UP have jumped by nearly 50 per cent since the start of 2008-09 season in October last year and currently rules around Rs 2,375-2,400 a quintal. The shortage forced India to turn a net importer of sugar after a gap of three years. The government permitted duty-free import of raw sugar by the industry as well as directed public sector trading agencies to import one million tonne refined sugar at nil duty.

The industry is hopeful of an improvement in output this year. However, delayed rains could lead to a lower than expected output. “The earlier estimate of 19-20 million tonnes for the next season might come down due to delayed monsoon,” said Tapriya. This could push prices further.