Sugar production likely to hit record next season

India’s sugar output is likely to scale record highs in the next marketing season, with farmers choosing to plant the crop despite falling prices and around ~200 billion ($2.96 billion) in delayed payments from mills for the current harvest.

Farmers such as Mohan Sawant, who this year planted cane on two acres of land, say they will be sticking with the crop in the marketing season that kicks off on October 1 as it still offers larger profits than alternatives such as wheat.

“Sugarcane gives me better returns... I would wait for payment instead of getting lower profit from other crops,” said Sawant in the district of Sangli, around 375 km south of Mumbai.

Industry officials and traders said that farmers’ devotion to cane would drive sugar production to a fresh peak in the next marketing season. Although they said it was too far out to make estimates on the amount by which output would exceed the 32 million-tonne record expected in the current marketing season.

“It is difficult to give an exact production number right now, but certainly next year output would be higher than this year,” said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories (NFCSF).

That output would likely stoke a glut that has weighed on local markets, potentially pushing the country to try to ship more of the sweetener overseas and dragging on global prices that have already fallen 17 per cent in 2018.

Farmers were cultivating cane on 4.87 million hectares as of last week, slightly higher than 4.79 million hectares at the same time in 2017, government data shows.

Apart from new plantings, large amounts of so-called ratoon crops will also be available due to the low cost of taking a second harvest, Naiknavare said.