Sugar industry upbeat on next season with normal monsoon forecast

With Skymet and India Meteorological Department (IMD) predicting a normal monsoon in 2022, the sugar industry is hopeful of another bumper harvest next season (October-September), at least at par with the current year. However, the sugarcane sowing in the next two months will be crucial to estimating any crop outlook.

“Though it is difficult to say anything at this stage, but the prediction of a normal monsoon means there is no reason India should not be producing same level of sugar output next season as well,” said Ravi Gupta, chairman of export and ethanol committee of All India Sugar Trade Association (AISTA). India’s sugar production is estimated to be about 34.5 million tonnes (mt) in 2021-22 season, he said.

According to the IMD forecast released on April 14, India will receive normal rainfall, quantitatively 99 per cent of the long-period average (LPA) of 87 cm during the June-September monsoon season, accounting for 75 per cent of the country’s annual rainfall of 116 cm. This year, private weather forecaster Skymet has also predicted a normal monsoon, 98 per cent of LPA. Rainfall between 96 per cent and 104 per cent of LPA is considered ‘normal’ as per meteorological terms.

However, while IMD sees the probability for a normal monsoon at 40 per cent, Skymet said it is 65 per cent.

Exports outlook

Gupta also said that sugar exports from the country might touch 6.8 mt by the end of this month against 5.7 mt in the first six months (October-March).

Ravi Gupta

“Since the overseas markets are good, it is right time to export the excess production. Currently the export rates offered by overseas buyers are more than our cost of production and this opportunity should be taken for export as much as we can,” he told Business Line in an interview. Since the country has more surplus with increased production, it is better to as quickly export the extra so that the stocks are brought to the optimum level, 6-6.5 mt, he added.

However, the longer-term solution for India is balanced sugar production and more and more ethanol; he emphasised and credited the government for continuing with a stable policy for the sector.

Ethanol programme

Asked about the ethanol programme’s case if there is one year of monsoon failure, Gupta said: “Any agriculture-based programme will have to account for weather vagaries. But, it is not that monsoon failure will lead to shortages. It (lower rainfall) can reduce the sugarcane crop by a certain percentage, but cannot wipe out the crop.”

He also said that the sugar surplus is estimated to be about 7 mt after factoring in 27.5 mt of domestic consumption. Besides, the sugarcane diverted for ethanol could have produced an additional 3.2 mt of sugar, over and above the current production estimate of 34.5 mt. “The surplus is so huge that there will not be any concern on availability of sugar for domestic market. Even for ethanol, there will not be a concern (in any bad monsoon year),” Gupta said.

Cane pricing

On the controversial issue of cane price, he said: “the best price policy is the revenue sharing formula as it makes the farmers partner in the growth story of the sector.” The private sugar mills, particularly in the largest producer Uttar Pradesh, complain about the higher cane price they pay to farmers. The State government fixes a separate rate, more than Centre’s Fair and Remunerative Price (FRP).

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