Sugar industry projects lower output, export

Mumbai: Sugar production in India will drop below the projected 20 million tonnes, due mainly to a late start to the cane crushing season, industry body the Indian Sugar Mills Association (ISNA) has said.

India, the world's biggest producer of the commodity after Brazil, may also see a fall in its exports at 4 lakh tonnes in the current financial year, according to ISMA.

Some of the mills in Maharashtra have started crushing cane 17 days behind schedule, while sugar manufacturers in Uttar Pradesh are yet to start crushing as late rains have delayed the cane harvest.

Mills in Uttar Pradesh have also been constrained by a higher prices of sugarcane set by the state government. The state government has set a price of Rs140 per quintal, up from Rs125 a quintal a year ago.

Maharashtra and Uttar Pradesh account for about 60 per cent of the country's total sugar output, which totalled 26.5 million tonnes in the year ended September 2008.

ISMA expects production to fall below 20 million tonnes while consumption moves above 23 million tonnes. This could wipe out around four million tonnes of the nine million tonne carry over stock.

Indian sugar mills, meanwhile, cut exports as international prices were expected to fall further.

The government in 2005 allowed mills to import duty-free raw sugar against an obligation to export white sugar in three years. Mills now have a combined obligation to export one million tonnes.
 
The International Sugar Organisation (ISO), meanwhile, expects global sugar production in 2008-09 to fall 3.8 per cent to 162.3 million tonnes.

Consumption is expected to increase in 2008-09 by 2.4 per cent to 165.9 million tonnes, leaving a 3.6 million tonne shortfall in production, according to ISO.