Sugar output may fall 4.6% in 2012-13, exports to continue

Written by Banikinkar Pattanayak | Idukki (Kerala) | Updated: Sep 29 2012, 07:03am hrs
Sugar output in India the worlds biggest consumer and second-largest producer is expected to dip 4.6% in the marketing year starting October, but the government has no plans to curb exports as domestic supplies remain adequate.

Production will likely touch 25 million tonne in 2012-13, compared with 26.2 million tonne in 2011-12, food minister K V Thomas said on Friday. Significantly, the official estimate is higher than the sugar output forecast of 24 million tonne firmed up by the Indian Sugar Mills Association (Isma) and 24.5 million tonne by the National Federation Of Co-operative Sugar Factories (NFCSF).

Despite the expected fall in output, sugar supplies would still exceed consumption, preventing any irrational spike in prices, which have risen by more than 15% since July on fears poor rainfall would hurt cane yield.

Adequate carry-forward stocks would also help keep domestic supplies steady and prices would remain at reasonable levels in times of the on-going festival season, the minister said, adding that the current policy of exports without any curbs would continue.

We cant switch on and switch off exports because farmers get hurt, Thomas said. If production reaches 25 million tonne, I would still be comfortable, he added.

According to an Isma estimate, sugar stocks at the start of the next marketing year are estimated at 6 million tonne from 5.5 million tonne in the previous year, thanks to higher production in 2011-12.

Earlier this month, Isma had trimmed its sugar production forecast from 25 million tonne for 2012-13. The country consumes around 21.5 million to 22 million tonne of sugar a year.

Considering surplus sugar production in the next year and a very comfortable opening balance as of October 1, there will be enough sugar to meet the domestic requirement throughout the next sugar season, Isma had said earlier this month. Both Isma and NFCSF have also said the country would have enough leeway to allow exports in 2012-13 as well.

The countrys sugar exports touched a four-year high of 3.30 million tonne so far this year, although shipments have slowed since August as domestic prices shot up while global rates remained subdued. Sugar prices started creeping up since June after poor monsoon rains affected sowing and also sparked fears of a drop in yield. Prices have since moved up by around 20% in the retail market.