India's sugar output to drop by 19 per cent this year

New Delhi: India's sugar output is expected to go down by almost 19 per cent this year, following anticipated poor crop yield in drought-affected states of Maharashtra, Karnataka, Andhra Pradesh and Telangana.

According to the Indian Sugar Mills Association (ISMA), the output for the 2016-17 season beginning from October would be 20.3 million tonnes, compared to 25.1 million tonnes the previous year.

Incidentally, the ISMA had in January estimated the output to be 21.3 million tonnes.

The Indian Sugar Mills Association (ISMA) cut the country's 2016-17 sugar production forecast for the third time during this marketing year, citing lower cane supply from drought-hit states.

The ISMA said that in some areas of these states, the yield per hectare in February this year was 40-50 per cent lower than last year at the same time.

"In addition to this, higher need of seed for increased acreage, especially in the state of Maharashtra, also resulted in lower sugarcane availability for crushing this season," the ISMA said in statement.

The ISMA held a meeting of its members representing sugar producing states on Monday and decided to revise the sugar production estimates in the current season.

"After detailed discussions and after considering the views of members representing respective states, the ISMA is of the opinion that the sugar production in 2016-17 season would be around 20.3 million tonnes," it said.

The ISMA said that the all mills, except 17 in Maharashtra, had almost closed their crushing operations, and, therefore, the state was expected to produce around 4.2 million tonnes.

"Similarly, the mills in Karnataka have also closed their crushing operations, but considering that it will have a special season from July to September, 2017 in South Karnataka, it is expected that the state will produce 2.12 million tonnes," the ISMA said.

On other hand, sugarcane availability, sugarcane yields and sugar recovery in the Uttar Pradesh is substantially better than last year.

"The trend in UP is, therefore, very different to the drought-affected states in the western and the southern part of the country," the ISMA said.

"Currently, there are 107 sugar mills which continue to crush sugarcane in UP, which is higher than the mills which were crushing last year at the same time. Sugar production this year is 0.9 million tonnes, more than what it was at the same time last year."

As most of the mills are expected to run till the latter part of April 2017, members from UP felt that they will together produce around 8.5 million tonnes of sugar this season, the ISMA said.

Also, the ISMA said the sugar sales and offtake from sugar mills was found to be substantially lower as compared to last year.

The ISMA said "Instead of seeing an increase in the sales, the mills are witnessing a drop in the same in comparison to last year. We have already received reports from all sugar mills, and noted that in the first four months of the current season, up to end of January 2017, sales by sugar mills has been lower by 0.75 million tonnes."

In the same meeting, the ISMA members reported that the sugar off-take was dull and, therefore, the off-take in February as well as in March, was also on the lower side.

"The main reason for lower sales could be demonetisation, drop in sugar purchase by the bulk consumers, price elasticity affecting demand and anticipated lower demand by state governments because of proposal to remove subsidy from the central government on PDS sugar," the ISMA said.

Hence, the ISMA now expects that the sugar sales this season will be between 23.8 and 24 million tonnes, as compared to last year's sugar off-take of 24.8 million tonnes.

Considering the opening balance of 7.75 million tonnes and considering an estimated sugar production of 20.3 million tonnes in the current season, and consumption of 23.8-24 million tonnes, the closing balance in the current season would be 4 to 4.2 million tonnes, as per the ISMA.

"This balance will be enough to meet the domestic requirement till almost end of November 2017," the ISMA said.