Sugar output in India’s second-biggest producing region will be less than expected after flood damage and as some farmers sell cane for feed.
Production in the western state of Maharashtra may total 5.2 million to 5.3 million tons in the year starting October 1, compared with a previous estimate of 6.44 million tons, said Shekhar Gaikwad, the state’s sugar commissioner. The new total is half last year’s 10.7 million tons, according to Gaikwad.
About 100,000 hectares (247,105 acres) out of 843,000 hectares of cane that will be available for crushing next season have been hit by flooding caused by excess rain last month, Gaikwad said. Rains in Maharashtra has been about 30% above normal since June 1, according to the weather office.
Prolonged dry weather earlier on caused fodder shortages in the state. That’s helping farmers get attractive returns by selling cane for feed. Cane prices, fixed by the government, generally stay above fodder costs, except in unusual years when poor rains boost feed prices. India, which vies with Brazil as the top producer, swings between importer and exporter, depending on output.
Farmers in Maharashtra are selling cane in the cattle-feed market for as much as Rs 3,500 ($49) a ton compared with a government-set price of about Rs 2,750 they expect from sugar mills in 2019-20, Gaikwad said.
As many as 1,400 cattle shelters have been set up across the state to feed about 350,000 animals amid a shortage of fodder. Farmers are getting ready cash instead of payment in installments by mills, he said.
“Both ways it’s good, as animals are getting fodder and at the same time the sugar surplus will be reduced,” Gaikwad said.
Inventories are expected to remain high despite predictions that sugar output may drop to a three-year low of 28.2 million tons in 2019-20 from a record 32.95 million tons this year after dry weather parched fields, according to the Indian Sugar Mills Association. A bigger drop in production will reduce the record surplus, potentially curbing exports and supporting global prices.
India’s sugar exports may climb to 3.7 million-3.8 million tons this year, with mills asking the government to help ship a record 7 million tons in 2019-20. India approved incentives worth Rs 626.8 crore ($875 million) last month to subsidize exports of as much as 6 million tons of sugar in 2019-20. The government will reimburse a portion of local and ocean freight charges and expenses related to handling, upgrading and processing sugar.