Even as pressure builds up on the Centre to curb sugar exports to boost domestic supplies, the industry has maintained that production next year would be 25 million tonnes.

This production forecast by the Indian Sugar Mills Association (ISMA) has come despite concerns over drought in parts of Maharashtra and Karnataka.

Uncertainty over next year’s crop has already sparked a rally in sugar prices that are hovering around Rs 40 a kg in retail outlets.

Unconfirmed sources said that the Government was contemplating a ban on sugar exports or may impose a 10 per cent levy to curb shipments.

ISMA officials clarified on Wednesday that there would be ample stocks at the start of next season in October and that India would remain a net exporter for a third year in a row.

They also said that domestic prices had turned attractive for the millers and no fresh export contracts were being signed.

“The sugar balance at the beginning of 2012-13 season will be 6.5 mt, about 1 mt more than the current year’s opening balance of 5.5 mt,” said Gautam Goel, President of ISMA.

The closing balance of 6.5 mt as of end-September is not only adequate to meet festive demand, but also to meet the requirement till January 2013, by which time sugar from the new season will be available.

“There are adequate sugar stocks. Unnecessary speculation would harm the industry in the long run,” he said.

Sugar prices, on ex-factory basis in North India, shot up by over 10 per cent from about Rs 3,200 a quintal to around Rs 3,600 in the past fortnight on concerns over drought impacting the crop in Maharashtra and Karnataka.

This led to a spurt in retail sugar prices at over Rs 40 a kg.

Abinash Verma, Director-General of ISMA, said that the forecast for 2012-13 had factored in lower production in Maharashtra and Karnataka. The projected shortfall in output in these States will be largely made up by Uttar Pradesh, where good rain has boosted crop conditions.

Acreage rises

Sugarcane acreage for 2012-13 has increased by 4 per cent to 52.88 lakh hectares (lh), as farmers in UP, lured by higher support prices, have planted an additional 2 lh.

Sugar output in UP for 2012-13 is pegged at 7.8 million tonnes from the current year’s 7 mt. Cane acreage in Maharashtra for 2012-13 is pegged at 9.45 lh, slightly less than the 10.28 lh in current season. As a result, the estimate in Maharashtra has been lowered by 15 per cent to 7.6 mt from 8.95 mt in the current season.

Similarly, in Karnataka, the acreage is estimated at 3.8 lh, down from 4.32 lh in the current season. Production is estimated to be lower by 21 per cent at 3 mt from 3.8 mt.

Output, exports

Production for 2011-12, as projected by ISMA, stands at 26 mt, while exports till end-September are expected to be 3.5 mt. The prevailing high prices have helped millers cover production costs and reduce cane arrears or payments to farmers.

Cane arrears stood at Rs 4,250 crore as of July 1 against Rs 9,900 crore in March 2012-end.

> vishwanath.kulkarni@thehindu.co.in

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