The Hindu Business Line : Sugarcane output estimate increased by 40 m tonnes

For, it was the Ministry's initial projections that constituted the basis for the Centre banning sugar exports last July and persisting with it right until January.

New Delhi April 4 This could well turn out to be the ultimate case study in official crop estimates going completely haywire and creating `real' trouble in the bargain. The Centre has yet again revised upwards its estimates of sugarcane output for 2006-07.

In its "first advance estimates", released on September 15, the Agriculture Ministry had projected the 2006-07 cane crop at 283.40 million tonnes (mt). Then, on February 5, came the "second advance estimates", which put the 2006-07 output at 315.53 mt.

But that is not it. In its latest "third advance estimates", released here on Wednesday, production has been revised still upwards to 322.94 mt. Thus, between September 15 and April 4 — in a space of less than seven months — the Ministry has raised the size of the cane crop by almost 40 mt!

A similar revision (though not as massive) had earlier been undertaken in the official estimates of sugarcane production for 2005-06. While the "first advance estimates" showed a figure of 257.72 mt, this has since gone up to 281.17 mt as per the latest "final estimates".

Such huge reassessments would, in normal circumstances, have simply provided matter for amusement or provoked serious concerns over official data collection and estimation methodologies. However, in this case, the Agricultural Ministry's underestimation of cane production has proved to be rather costly.

For, it was the Ministry's initial projections that constituted the basis for the Centre banning sugar exports last July and persisting with it right until January. The adverse impact of this on the sugar industry and cane growers — following loss of export business at a critical period when global prices ruled high — is too well known.

And as official realisation on the extent of glut has dawned, the Centre has not only lifted the ban on shipments, but also recently cleared a package of export subsidies and buffer stock creation to bail out the industry!

Output

The story may still not be over. According to most estimates, sugar production during the 2006-07 season would be in the 24-25 mt range, which at an average 10 per cent recovery, necessitates crushing of 240-250 million tonnes of cane by mills. Going by the latest crop projection of 322.94 mt, it would mean 74-77 per cent of the total cane produce being processed by the industry.

Again, past records reveal that no less than 20 per cent of the country's sugarcane is diverted for manufacture of indigenous sweeteners (gur and khandsari), with another 10 per cent being used for seed, feed and chewing purposes. So, if sugar output does end up at 24-25 mt, one can expect yet another round of upward revision in the cane crop size.