Sugar output may rise 5% to 25.5 million tonne in 2014-15

ISMA has demanded that the govt should continue the export subsidy on raw sugar in 2014-15

India's sugar output is estimated to rise up to 5% at 25.5 million tonnes in the next marketing year starting October despite drop in sugarcane area, according to industry body ISMA.

This would be the 5th consecutive year when the country's sugar production is set to exceed annual domestic consumption of about 23-24 million tonnes.

Sugar production in India, the world's second-largest producer after Brazil and biggest consumer, has been pegged at 25-25.5 million tonnes in 2014-15 marketing year (October-September) against 24.3 million tonnes in the current year.

Indian Sugar Mills Association (ISMA) has demanded that the government should continue the export subsidy on raw sugar in 2014-15 as only 0.7 million tonnes have been shipped this year under this scheme out of the approved 4 million tonnes.

Total sugar export in 2013-14 is estimated at 2.11 million tonnes, of which about 55% would be raw sugar and rest refined sugar.

"On the basis of September 2014 satellite images, ISMA estimates the total cane acreage at 5.29 million hectares, which is just about 1% less as compared to last year," the association said in a statement.

In its preliminary estimates released in July, ISMA had pegged the sugar estimate at 25.3 million tonnes.

"Due to the erratic monsoon and difficulties in making a correct assessment of its impact as of now, the first advance estimates of ISMA for sugar production for 2014-15 sugar season is estimated to be in the range of 25 to 25.5 million tonnes of sugar," the association said.

Maharashtra's sugar production could rise by 20% to 9.3 million tonnes in 2014-15, while output in Karnataka is expected to rise by seven% to 4.45 million tonnes.

However, production in Uttar Pradesh is expected to fall to six million tonnes from 6.5 million tonnes in 2013-14.

In view of surplus production and high opening stock of about 7.5 million tonnes, the industry body said: "It is important to continue with the export incentive scheme for raw sugar in 2014-15".

ISMA said new avenues should be explored to dispose surplus sugar like conversion of cane juice into ethanol with government assistance including incentives/subsidies.

"One billion litres of additional ethanol procurement can reduce about 1.7 million tonnes of surplus sugar from the market. This can help the industry with better cash flows and they can pay cane price to the farmers on time in the next sugar season," it added.

At present, sugarcane arrears to farmers stand at Rs 7,760 crore as industry is facing liquidity problem due to losses on sugar sales.