With Skymet and the India Meteorological Department (IMD) predicting a normal monsoon in 2022, the sugar industry is hopeful of another bumper harvest next season (October-September), at least at par with the current year. However, the sugarcane sowing in the next two months will be crucial to estimating any crop outlook.
“Though it is difficult to say anything now , the prediction of a normal monsoon means there is no reason India should not be producing the same level of sugar output next season as well,” said Ravi Gupta, Chair of the export and ethanol committee of All India Sugar Trade Association (AISTA). India’s sugar production is estimated to be about 34.5 million tonnes (mt) in 2021-22 , he said.
As per an IMD forecast released on April 14, India will receive normal rainfall, quantitatively 99 per cent of the long-period average (LPA) of 87 cm, during the June-September season, accounting for 75 per cent of the country’s annual rainfall of 116 cm.
However, while IMD sees the probability for a normal monsoon at 40 per cent, Skymet said it is 65 per cent.
Gupta also said that sugar exports might touch 6.8 mt by month end against 5.7 mt in the first six months (October-March).
“Since overseas markets are good, it is right time to export the excess production. Currently export rates offered by overseas buyers are more than our cost of production and we must export as much as we can,” he told Business Line in an interview. With increased production, it is better to quickly export so stocks are brought to the optimum level, 6-6.5 mt, he added.
However, the longer-term solution for India is balanced sugar production and producing more and more ethanol, he emphasised and credited the government for continuing with a stable policy for the sector.
Asked about the ethanol programme’s fate if the monsoon fails for another year, Gupta said, “Any agriculture-based programme will have to account for weather vagaries. Lower rainfall can reduce the crop by a certain percentage, but cant wipe it out .”
He also said the sugar surplus is estimated to be about 7 mt after factoring in 27.5 mt domestic consumption. Besides, the sugarcane diverted for ethanol could have produced an additional 3.2 mt of sugar, over and above the current production estimate of 34.5 mt.
“The surplus is so huge that there will be no concern for the domestic market or for ethanol in any bad monsoon year,” Gupta said.
On the controversial issue of cane price, he said, “The best price policy is the revenue sharing formula as it makes farmers a partner in the growth story of the sector.”
Private sugar mills, particularly in the largest producer Uttar Pradesh, complain about the higher cane price they pay to farmers. The State government fixes a separate rate, more than Centre’s Fair and Remunerative Price (FRP).