India eyes record sugar output in 2018-19

Though early days, a section of the Indian sugar industry is talking of a record 29-30 million tonne sugar production in the crop marketing year that will start from October 2018.

The estimate is based on the standing cane crop in some states and planting intentions by farmers.

If true, this will be almost 4-5 million tonnes more than the sugar production of 2017-18, projected at 25 million tonnes.

A section of the industry feels a good retreating monsoon and stable prices received by cane farmers will encourage them to plant more of it.

“The retreating monsoon this year has been good in parts of Maharashtra after two consecutive years of low rainfall. In Uttar Pradesh, the high-yielding C0-238 variety is expected to cover almost 80 per cent of the planted area, which should itself lead to a significant rise in sugar production,” Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories, told Business Standard.

He said the overall sugar crushing capacity was also expected to rise significantly as nearly 80 closed cooperative sugar factories would become operational in the coming months. Of these, 40 factories are in Maharashtra and 30 in Uttar Pradesh.

“We have not yet assessed the crop estimates for 201819, but whatever information we have from the market points to a rise in production in 2018-19,” said RP Bhagria, chief executive officer of the All India Sugar Trade Association.

Uttar Pradesh’s planting of the high-yielding C0-238 cane variety could lead to a spike in its sugar production. The state is expected to remain India’s foremost sugar producing state for the next few years.

The price realised by cane farmers in 2017-18 is also expected to be better as the Uttar Pradesh government has increased the state advised price (SAP) by ~10 per quintal for the common and early maturing varieties to ~315 per quintal and ~325 per quintal, respectively.

The central government, too, has increased the fair and remunerative price (FRP) of sugarcane for the 2017-18 season by ~25 per quintal to ~255 per quintal. For the 2018-19 season, the FRP is expected to be increased by another ~20 per quintal.

“Overall, sugarcane seems to be the only crop that will provide decent returns to farmers, which is why there is talk of increased planting in the coming season,” another industry player said.

The expected bumper harvest has yet again spurred calls for plans to absorb the surplus. If these estimates are correct, India may have a surplus of 4-5 million tonnes of sugar by the end of the 201819 season.