India’s sugar production is likely to rise to a record 35.9 MT in 2018-19, surpassing that of Brazil’s 30.1 MT.

 

India is all set to become the world’s largest sugar producer, surpassing Brazil. According to a projection of the Foreign Agricultural Service of US Department of Agriculture, India’s production is likely to rise by 1.8 million tonne (MT) to a record 35.9 MT in 2018-19.

On the other hand, Brazil’s production is likely to witness a decline of 8.3 MT to 30.1 MT.

This is the first time in more than 15 years that Indian production would exceed that of Brazil, which has traditionally been the world’s top sugar producer. India had a record sugar production of 32.5 MT in 2017-18.

As a result of this bumper production, wholesale prices of sugar have come down to Rs 29-30 in many states.

Production in India is likely to increase because of increased area under sugarcane cultivation and improving yields, in spite of pest and weather concerns, while that of Brazil is likely to decrease due to adverse weather and a shift to produce more cane-based ethanol, as per the report.

“Consumption is also forecast at a record 27.5 MT due to a growing population and strong demand from food processors. Exports are forecast to more than double to 4 MT as sugar mills seek to reduce stocks which are expected to soar to a record 18.1 MT,” the report, which was released recently, said.

The report forecasts that the global production for 2018-19 may be down by 9 MT to 186 million primarily due to the 8-MT drop in Brazil and more sugarcane being diverted towards ethanol production.

However, it says that despite reduced production, Brazil is expected to remain the world’s top global exporter, followed by Thailand.

According to the report, global consumption of sugar is also expected to rise to 176.8 MT from 174 MT in 2018-19.

However, the Indian Sugar Mills Association (ISMA) has differed with the US projections and predicted that production may decline to 31.5 MT in 2018-19, compared to its record 32.5 MT production in the previous year.

In July, the ISMA had projected 35.5 MT for 2018-19, but revised its production estimates downwards, as the sugarcane crop in the three main growing states of UP, Maharashtra and Karnataka, which contribute about 80% of the total sugar output, was impacted adversely.

As a result of the record sugar production in 2017-18 and carryover stocks, the wholesale prices of sugar have come down to Rs 29 to 30 per kg.

While surplus production is set to bring cheers to the consumers, sugar producers fear that, due to lower sugar realisation from domestic sales as well as depressed global sugar market, sugar mills are unable to generate sufficient funds for payment of cane prices to the farmers on time.

Speaking to The Sunday Guardian, an ISMA spokesperson claimed that because of the lower wholesale prices, the sugar mills have not been able to cover even the production cost.

“The cost of production comes to around Rs 35-36 per kg, whereas the prices have come down to around Rs 30. We have demanded before the government to the raise the minimum support price (MSP) so that we do not suffer losses,” he said.

In order to solve the problem, sugar mills have been asked to mandatorily export 5 MT in the current marketing year to liquidate surplus stocks and clear cane arrears to the farmers.

In order to address the problem of excess carryover stocks, the Cabinet recently approved measures involving a total assistance of Rs 5,500 crore to support the sugar sector.

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