Sugar industry            (updated - 14 Mar 2009)
Sugar output in India, the world’s second-biggest producer, may rebound by 25 per cent next year as farmers boost sugarcane plantations to benefit from a rally in prices, reducing the nation’s reliance on imports.

The production may increase to 20 million metric tonnes in the year beginning October 1 from 16 million tonnes this year, SL Jain, director general of the Indian Sugar Mills Association, said in a phone interview. The country may still need to import sugar as the demand is increasing, he said.

A rebound in the Indian output may cool a rally in global prices. Raw sugar has climbed 11 per cent this year in New York and refined sugar has advanced 27 per cent in London on expectations of a widening shortfall in global supplies.

Sector Specific - Sugar Industry                

“Farmers are back to planting sugarcane again, thanks to the good prices they are getting this year,” Jain said from New Delhi. “However, increased production will still not be sufficient to meet the rising demand.” The country’s sugar consumption next year may total 24 million tonnes compared with 23.5 million this year and stockpiles at the start of next season may be 1.5 million tonnes, Jain said.

“India will have to import sugar next year,” he said yesterday. “But `how much?’ That will depend on prices.” Raw-sugar futures for May delivery rose as much as 0.5 per cent to 13.16 cents apound in after-hours trading on ICE Futures US in New York today.
Mills, including Shree Renuka Sugars, may import 1.5 million tonnes of raw sugar during the year to September 30 to fill a gap in the output, Managing Director Narendra Murkumbi said yesterday.

Last month, the country allowed duty-free imports of raw sugar until September for processing and local sale.
source - BS

Sugar industry             (updated - 24 Mar 2009)
The domestic sugar industry, through its apex body Indian Sugar Mills Association (ISMA), has protested any government move to allow duty-free imports of white sugar. The move, it claims, will bring down prices and impact the industry’s capacity to make payments to sugarcane growers. The government is contemplating reducing the import duty on refined sugar to zero from 60 per cent in view of the rising sugar prices in the domestic market.
Retail sugar prices have risen by about 30 per cent to Rs 26 a kg owing to a dip in the output. According to ISMA, domestic sugar output during the 2008-09 season (OctoberSeptember) has been estimated at a four-year low 15.5 million tonnes, down over 45 per cent from last season. However, along with the opening stock of 8 million tonnes and raw sugar imports of 1.5 million tonnes, the season’s availability will be 25 million tonnes against a consumption of 22.5 million tonnes.

“Any import of raw sugar at nil duty will be a kind of bailout to the Brazilian farmers. If that happens, Indian farmers would be terribly hurt. Moreover, enough sugar is available to meet domestic consumption,” said Vivek Saraogi, managing director of Balrampur Chini Mills and vice president, ISMA.
With the decline in crude oil prices, Brazil may divert sugarcane from ethanol to sugar, resulting in higher output. This would have a downward pressure on international prices, ISMA President Samir Somaiya said. “The price control benefits only bulk consumers like food processors and sweetmeat makers,” he added.
A KPMG study has found that these institutional buyers account for around 70 per cent of the domestic consumption.
Sugar prices have moved up in tandem with the sugarcane prices. “We cannot disconnect sugar prices from sugarcane prices,” Somaiya said. Sugarcane prices in Uttar Pradesh, the country’s second biggest sugarcane producer was increased by Rs 15 a quintal to Rs 140.
The price rise has prompted the government to relax raw sugar import norms and imposition of stock holding limits on sugar. Freight assistance on export was withdrawn. Sugar has a weightage of 3.62 per cent in the wholesale price index.
source - BS

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