Sugar prices may skyrocket

Sugar prices may skyrocket

COLOMBO: Sugar prices in India are expected to rise during the festive season due to an estimated sharp dip in production to 215 lakh tonnes next year, according to a leading sugar producer.

"A large diversion of area from sugarcane to wheat and other crops is expected to bring down sugar production from over 280 lakh tonnes this year to 215 lakh tones during 2008-09 (October-September)," Modi Group Chairman and CEO Umesh K Modi said.

"The festival season has started and with diwali approaching, the prices of sugar could go up drastically till Christmas during the end of the year," Modi said.

This, it is felt, could be due to future demand-supply mismatch anticipated by the marketmen as a result of to a sharp decline in sugar output estimated next year.

Modi, whose group has a big presence in the sugar sector and runs the Modi Sugar Mills, said the balancing of prices to keep it under check for the end consumers has led to a crisis wherein the sugarcane growers are diverting to other crops due to less remunerative prices for the crop.

It is estimated that the acreage of sugarcane in Maharashtra is expected to reduce about 25 per cent in 2008-09.

Modi Sugar Mills, located in the heart of sugarcane producing belt of Western Uttar Pradesh, produces 60,000 tonnes of high quality white crystal sugar per annum and is now renowned as one of the most efficient sugar plants in Northern India.

The decline in sugar production could push up the price of sugar to Rs 1,600 per quintal from Rs 1,485 per quintal, marketmen feel.

Source : DNA India

 

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Modi estimates that the decline in acreage under sugarcane production could be by as much as 10-15 per cent going by the present trend.

Following incentives given by the government to farmers and the sugar industry, the production of the sweetener in India had shown vast improvement during the last few years.

It may be recalled that sugarcane output in the country also showed an increasing trend over the last five years (2003-04 to 2007-08).

The sugarcane production during 2007-08 estimated at 340.32 million tonnes, according to the Second Advance Estimates released on February 7, 2008, is less than the production during the previous year.

Decline in production during 2007-08 is on account of less area coverage under sugarcane during 2007-08 compared with 2006-07.

Among the major producing states, lower production during 2007-08 has been reported in Uttar Pradesh, Karnataka, Andhra Pradesh and Gujarat.

To increase the production and productivity of sugarcane in the country, government is implementing a Centrally Sponsored Scheme of Sustainable Development of Sugarcane Based Cropping System (SUBACS) in different states subsumed under Macro Management Mode of Agriculture since April, 2004.

The all-time high sugar production and sugar inventory in the last sugar season 2006-07 and anticipated high sugar production for the current sugar season 2007-08 had resulted in decline in sugar prices in the domestic market.

This restrained the capacity of the sugar mills in making timely payment of remunerative price of sugarcane to the cane growers.

Indian government has taken a number of steps to help the sugar industry and farmers, including creation of a 20 lakh tonne buffer stock for a period of one year, from May 1, 2007 to April 30, 2008.

Besides, an additional buffer stock of 30 lakh tonnes has been created for a period of one year, from August 8, 2007 to July 31, 2008.

Centre also decided to give loans from banks to the sugar mills - private, public and cooperative sector -- under 'Scheme for Extending Financial Assistance to Sugar Undertakings 2007' to boost sugar production.