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Suresh P. Iyengar

Mumbai, Sept 4 Hit by a steep fall in sugar output in India and Brazil, the International Sugar Organisation (ISO) has forecast the global production to fall 7.4 million tonnes to 161.6 million tonnes in 2008-09.

“The world sugar deficit will be of 3.90 million tonnes in 2008-09 against a surplus of 7.25 million tonnes in 2007-08,” ISO said.

A significant production shortfall in India and a continuing contraction of production in the European Union (EU) are two major supply features of 2008-09, it added.

According to the Maharashtra State Co-operative Sugar Factories Federation Ltd, sugar production in 2008-09 is estimated to fall 20 per cent to 21.7 million tonnes (mt) against 27.3 mt. It may slip further by 14 per cent to 18.7 mt in 2009-10 sugar season, the Federation said. “Apart from less rain, delay in payments from the sugar producers has discouraged farmers to take up sugarcane cultivation. They have shifted to other remunerative crops and thus a decline in sugar output,” said an analyst.

In Maharashtra, the output is estimated to drop 38 per cent to 5.7 mt (9.2 mt), Uttar Pradesh 14 per cent to 6.5 mt (7.6 lt), Karnataka 2.5 mt (2.8 mt), Tamil Nadu 2 mt (2.5 mt) and Andhra Pradesh 1 mt (1.3 mt).

Sugar output in Brazil’s Centre South, the world’s biggest-producing region, slumped 20 per cent in the first half of August after rains slowed harvesting and mills turned more cane into ethanol.

According to the Center South Sugar and Ethanol Industry Association, output in the region, where mills produce more than four- fifths of Brazil’s sugar, fell to 1.71 million tonnes through August 15 from 2.15 million tonnes a year earlier.

Mills turned 60 per cent of their cane into ethanol this month, up from 53 per cent a year earlier, according to the Brazilian Sugarcane Industry Association.

Sugar prices have been on the rise in the last few months on increase in demand. Prices have jumped 27 per cent to Rs 1,740 a quintal on Thursday from Rs 1,375 on June 2.

“The lower output is likely to keep prices firm in the festival season beginning October, though millers may not get any more sops such as subsidy on exports or bank interests, which the government had announced to dilute the inventory,” he said.

The incentives were given when the output was very high last year and prices had come down sharply and cane price arrears were very high.

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