India’s sugar sector is undergoing a crisis owing to a production glut. In 2017-18, the production was 31.6 million tonnes, while the demand was estimated to be 25 million tonnes.
New Delhi: The Indian Sugar Mills Association (ISMA) has lowered the estimate for sugar production in the country to 31.5 million tonnes. Earlier, in July, ISMA had estimated that the sugar production would be 35 million tonnes. That estimate has now been lowered by 11% owing to expected diversion of sugarcane juice for ethanol production, rains in late September in western Uttar Pradesh, pest infestation in Maharashtra and Karnataka and low rainfall in Karnataka. UP, Maharashtra and Karnataka account for more than 80% of India’s sugar production.
ISMA also expects sugar recovery to be lower than what it had earlier estimated and also lower than last year’s recovery. “Therefore, despite substantial increase in acreage in Maharashtra, the sugar production now estimated from the State of Maharashtra will be much lower than last year,” an ISMA press release said.
Thus, despite the area under sugarcane being 25% higher than last year in Maharashtra, the sugar production is expected to be 11% lower.
Referring to the heavy rainfall that large parts of north India received in late September, ISMA observed that it impacted the growth of sugarcane in western UP, where sugarcane is synonymous with agriculture. “Some areas have reported water-logging and in some parts of Western UP, there has been sugarcane lodging also,” ISMA said. Thus, the sugar production is estimated to be the same as last year at 12 million tonnes.
India’s sugar sector is undergoing a crisis owing to a production glut. In 2017-18, the production was 31.6 million tonnes, while the demand was estimated to be 25 million tonnes. Sugar prices fell and sugar mills were unable to pay the dues of farmers. Sugarcane dues continue to be, even four months after the season ended in June, around Rs 9,000 crore.
The government has undertaken a range of measures to address the crisis including soft loans to sugar mills, minimum export quotas, maintenance of buffer stocks. These measures are aimed at ensuring that the dues of farmers are cleared. However, the measures have not worked.
Even with the lower estimates of sugar production, the problem is likely to remain. There is likely to be an opening stock of around 10 million tonnes. In all, supply is likely to be 76% higher than demand.
As sugar mills reopen in early November, they will still have to clear the pending dues of Rs 9,000 crore of farmers.
Farmers, particularly in Uttar Pradesh, are restive. Protests have been staged in most districts of western UP. “The new season is almost here and we have still not be paid the dues of last year. Farmers are effectively providing raw material free of cost to sugar mills. The BJP had promised that payments will be cleared within 14 days, but, it has been a year now,” said Kuldeep Tyagi of the Bhartiya Kisan Andolan, which recently staged a protest in Meerut.
Source: The Wire