The Hindu Business Line : Sugar output seen sharply lower at 140 lakh t

THE country's sugar production is likely to be only around 140 lakh tonnes (lt) during the 2003-04 season (October-September). This is considerably lower than the initial estimate of 155-160 lt made by the Government.

The downward revision, not official yet, is in view of the output during the current season till April being only around 133 lt and crushing operations virtually complete. "During the previous 2002-03 season, there was a huge oversupply of sugarcane, which resulted in mills producing over 10 lt of sugar as late as in May. But this time, there is very little cane available and most mills, barring some in Tamil Nadu and Karnataka, have closed shop for the season," they noted.

The latest projected production of 140 lt for the 2003-04 season would be a sharp fall over the record 201.45 lt for 2002-03. Much of this decline has been induced by drought in Maharashtra, Karnataka and Tamil Nadu. Maharashtra's sugar output this season is estimated at a mere 31.90 lt, against 62.21 lt during 2002-03, with Tamil Nadu's production, too, slated to dip from 16.44 lt to10-11 lt.

But what is equally significant is that even in Uttar Pradesh, which did not see any drought, mills are expected to end up producing only 46 lt during 2003-04, as against 56.51 lt in the previous season. "Cane yields and sugar recoveries were lower this time. One of the reasons for this could have been the poor financial position of growers, who did not have resources to invest sufficiently in their crop," the sources said.

If the actual sugar production this season turns out to be 15-20 lt below the initial expectation, it could make a substantial difference to the country's overall supply position. Making things worse is the huge discrepancy in estimates of stocks held by mills at the start of the current season. The Government's estimate of opening stocks for October 1, 2003 was 127.62 lt, while the industry puts it at about 116 lt. There are others who say the figure would be closer to 105 lt.

"It is very difficult to get a correct picture of the carry-over stocks from the 2002-03 season because many mills have not supplied data in this regard. Many of them sold sugar in excess of their official free sale quota through court orders. An official enquiry is, in fact, currently underway to ascertain the actual stock position with mills," the sources added.

What all this means is that the total domestic sugar availability during the current season will be between 245 lt (assuming opening stocks of 105 lt) and 267 lt. There are varying estimates of consumption as well. Even if one takes the180 lt domestic consumption level for 2002-03, it would translate into stocks of 65-87 lt at the end of the current season, sufficient to meet 4-6 months' requirement. The supply position would be more precarious, if actual consumption turns out to be higher than 180 lt.

And since the effect of the drought would be felt in plantings of cane during the coming 2004-05 season as well, there is every likelihood of sugar production being once again in the 130-140 lt range. "Maharashtra's production in 2004-05 is going to fall further to below 20 lt, though this would be offset largely by higher output from Uttar Pradesh. The mills in UP will really benefit from the tight supply position in the coming season, as they are the only ones who will have enough cane to crush," the sources said.

They also felt that the Government should be more judicious in making free sale releases, as "we should not find ourselves suddenly in a situation where mills have run out of stocks, making raw sugar imports inevitable." It is estimated that nearly 10 lt of sugar are currently lying in the pipeline with large stockists, who, unlike mills, are not under any obligation to `release' their stocks to consumers, or subjected to any specified stock turnover period.