China drought may not boost Indian sugar exports

The production loss in China is unlikely to help the Indian sugar industry, which is reeling under declining prices and low realisation. The consumption pattern in the world's most populated country does not favour a substantial rise in exports from India.

China imports only a small quantity of sugar from India. Its requirement is mostly met through imports from Thailand "" a sugar surplus country. "The China factor will not increase Indian sugar exports," said S L Jain, director general, Indian Sugar Mills Association (ISMA).

China consumes about 13 million tonnes of sugar a year against its production of 12 million tonnes. This year, the production is likely to decline by at least half a million tonne because of drought in the Guangxi region, which accounts for approximately 60 per cent of China's production. The extent of damage of the sugarcane crop could be much wider if the rains fail.

Experts believe the dry weather during November-December, when sugarcane crop matures, hampers recovery and may result in a dramatic decline in the sugarcane output of the country.

China's top sugar growing region produced over 7 million tonnes of sugar last year and, according to early estimates, was above 8.4 million tonnes this year.

Indian sugar producers are waiting for potential markets to offload their surplus output. But they are unlikely to get fresh orders from China as the output loss is too small.

Meanwhile, the government's stance to offer long-term loans to sugarcane farmers can provide some relief to mills. Almost all sugar surplus countries are providing long-term unrecoverable loans, as subsidy cannot be granted under the World Trade Organisation (WTO) norms. Hence, the government of India's latest initiative may help mills recover some losses, Jain added.

As per an industry estimate, India has crushed 30 per cent less cane this year on delayed start of the process, and the country is likely to produce 28.3 million tonnes against the previous estimate of 30 million tonnes. Last year, the country produced 28 million tonnes of white sugar.

Refined sugar prices have dropped 35 per cent in 18 months, making the sweetener the worst-performing agricultural commodity over that period. World output may exceed demand by 11.1 million tonnes this year.