Cane is taking over in a big way and people are uprooting vegetables and planting cane in their backyards, SL Jain, director general of the Indian Sugar Mills Association, said in an interview. Cane is one of the most profitable options our farmers have today.
Indias sugar output in the year to September 2006 is likely to rebound to 18.5 million tonne from about 13 million, a year ago.
Mr Jain said that returns to mills had improved and farmers were getting timely payments for their cane crop. Mills are paying more than the state-administered price for cane and there are no arrears.
There are about 450 sugar mills in India and many in the cooperative sector have been ailing due to low domestic prices and high loans, resulting in huge arrears to farmers. We are finally seeing light at the end of the tunnel, he said.
Mr Jain said that the country has already contracted in the last two months to export 200,000 tonne of sugar, contributing to an estimated total of 600,000 tonne for the year to September.
Indias Sugar Exim Corp is bidding for Pakistans sugar import tender of 50,000 tonne after winning a similar tender last month.
We have freight advantage and we can provide the right quality as they want medium and coarse grains, which many countries will not be able to supply, Mr Jain said.
The director general said, higher sugar output was unlikely to lead to a glut because of strong prospects for exports, which are likely to increase to 1.5 million tonne next year. We have the advantage of sitting around countries which are net sugar importers. He said, Sri Lanka, Bangladesh, Pakistan, Indonesia and the Middle East have a combined annual import demand of 5 to 6 million tonne.
Mr Jain said domestic sugar prices, which have been declining after hitting peaks, were unlikely to fall further. The government, which controls the sale and distribution of sugar, has been releasing additional quotas to check inflation.
Retail sugar prices in India have fallen to Rs 21 ($0.47) a kg from Rs 23, a few months ago.