Karnataka, one of the largest sugarcane growing States, is likely to see a near 30% decline in sugarcane production this season due to deficit rains. Its neighbouring State Maharashtra may have a 10-20% drop in cane production, again because of erratic rains, according to sugarcane growers’ associations.

However, production in Uttar Pradesh is said to be on track in the current season (October 2023-September 2024).

Though it is too early to get a clear picture, sugar production estimates by multiple agencies indicate that there will be a drop.

The Indian Sugar Mills Association (ISMA) said recently that, according to its preliminary estimates, area under sugarcane cultivation this year is 57 lakh hectares and total sugar production will be 33.7 million tonnes in the 2023-24 sugar season. “With India’s domestic consumption average of 278.5 lakh tonnes (27.8 million tonnes), the production estimates assure sufficient sugar for domestic consumption,” it said.

The production last season was 36.9 million tonnes and the current year opened with a 6.5 million stock. While production may drop 20% in Karnataka and Maharashtra, production will increase nearly 8% in Uttar Pradesh, it said.

Agrimandi.live Research House has projected a 9.4% drop in total sugar production and a 2.9% increase in sugar consumption in the current year compared with last sugar season.

The OECD-FAO Agricultural Outlook 2023-2032, says that after touching a 16-month low in October 2022, “international sugar prices rebounded sharply later in the year and in early 2023, mainly reflecting prevailing overall tight global sugar supplies amid strong global import demand.” Sugar production is forecast to decline in India and in the European Union, due to lower sugar beet plantings and yields, it said.

Though sugar production this year will be lesser than the last two seasons, the availability is sufficient for domestic demand, say sugar producers.

Yet, in a season that will see a fall in production after nearly five years, the Indian sugar sector is in need of long-term policy decisions that will bring stability to all stakeholders.

India exported 11 million tonnes of sugar in the marketing season 2021-2022 and six million tonnes in 2022-2023. This year, the government has brought sugar exports under restricted category as domestic prices went up slightly. International sugar prices saw a sharp jump last year. In India, the hike was marginal because sugar is a controlled commodity, said Uppal Shah, co-founder and CEO of Agrimandi.

“Sugarcane production is affected in North Karnataka and Maharashtra and this will impact the sugar mills too,” said one of the sugar producers in Karnataka. “International raw sugar prices are far higher than Indian prices. But the mills cannot export now. The government is yet to announce the ethanol prices for the current season. That is important for the sugar mills,” the sugar producer added.

“While sugar should be affordable to consumers, sugarcane farmers should also get viable prices. At present, the ethanol programme is the main stay for the sugar mills. The current ethanol blend level is 11.5% and it is targeted to touch 20% in 2025-2026. Roughly, four million tonnes is diverted for ethanol production. We need to see what happens this year,” said another sugar producer in Tamil Nadu.

In Karnataka, the farmers have demanded a Fair and Remunerative Price (FRP) of ₹4,000 a tonne as the cost of cultivation is ₹3,580 a tonne and the current FRP is ₹3,150 a tonne for a basic (sugar) recovery rate of 10.25%. Kurubur Santha Kumar, Karnataka president of the Indian Sugarcane Farmers’ Association, says it was not just the loss of crop, but yield too was affected this year. Further, the average sugar recovery rate is less than 10%. So, the government should reduce the recovery rate to 8.5% for south Indian sugarcane farmers and support those who have suffered crop loss because of deficit or unseasonal rains. Farmers will divert to other crops if they do not get remunerative prices for sugarcane.

Aditya Jhunjhunwala, president of ISMA, said the priority areas for the sugar mills are domestic supply, ethanol production, and exports. “The domestic prices went up gradually and only slightly,” he said. Further, the restrictions on exports are not likely to affect the mills.

It is the government that decides the FRP and the minimum selling price for sugar. “We are not against higher FRP for farmers. But, the FRP and the MSP should be in tandem. The MSP should also be increased. The government has the inflation data and the ethanol requirements. The ethanol season started this month but there is no clear picture yet on its pricing. We are asking for a long-term ethanol pricing formula so that the mills do not have to wait for the prices every year. The sugar mills have made investments to build capacities and need to repay loans. Ethanol prices will help the mills decide the quantity of sugar to be diverted for ethanol production,” he said.

The above news was originally posted on news.google.com