Uttar Pradesh is forecasted to produce 6.2 million tonne of sugar in the year from October, down 15% from a year ago, due to a drop in acreage as farmers moved to crops like paddy, the official wished anonymity told Reuters. The mills in the state are likely to begin crushing by October-end, he added.
The state is estimated to have produced 7.3 million tonne in the year ending September 2008, trailing Maharashtras estimated output of 9.1 million tonne.
Together the two states are estimated to have produced 60% of the countrys total output, pegged at about 27 million tonne. However, senior trade officials in Maharashtra have said that the output in the state in the year ending September 2009 will be between 5.2-5.7 million tonne due to diversion of cane crop for non- sugar use and deficient rains.
Though the area under sugarcane in UP was lesser by 21%, the rain pattern has been alright this year. So the overall production will be less affected, the official said. Low domestic output is likely to keep prices firm next year, though millers may not get any more subsidy on exports or bank interests, which the government had announced over last 18 months or so to help those with excess supplies.
We are expecting all subsidy and incentives would be gone next year. These relief measures were given when the output was very high, prices had come down drastically and cane price arrears were very high, the official said.
Sugar prices fell nearly 28% to less than Rs 1,300 per 100 kg a year ago on expectations of a record output. Now though sugar prices are picking up, the performance of the mills will depend on the cane price in the new season, the official said.
Private mills in Uttar Pradesh and the state government are fighting court cases to determine the price of cane, for the 2007-08 season, that has to be given to the farmers.