Commodities

India will remain major player in sugar, but uncertainties persist: OECD-FAO

G. CHANDRASHEKHAR | Updated on July 21, 2021

India's production is forecast to reach 35.6 million tonnes by 2030

Over the coming decade till 2030, Brazil, closely followed by India, will continue to dominate the world sugar market as the largest producer of cane sugar, accounting for 21 per cent and 18 per cent respectively, while Thailand is expected to increasingly play a bigger role than it has hitherto in production and export, the OECD-FAO Agricultural Outlook 2021-2030 report has predicted.

World sugarcane production is projected to grow by 1 per cent per annum and reach 1,960 million tonnes by 2030, with Brazil and India anticipated to contribute 65 per cent of the change in global output volume (38 per cent and 27 per cent respectively). While Brazil’s sugar production is projected to increase to 41.0 ml t, production in India is forecast to reach 35.6 ml t by 2030.

Income gains and urbanisation are likely to drive per capita consumption of sugar, especially in Asia where the per capita availability is relatively low. Asia will account for more than half of world consumption by 2030. India will experience the largest increase in consumption growth. Higher consumption will be triggered by expanding demand for sugar-rich confectionery products and soft drinks.

For the next 10 years, Brazil will continue to remain the leading sugar exporter, followed by Thailand and India. On the import side, countries that have invested in sugar refineries – Indonesia, China, theUAE, Algeria – will mainly import raw sugar while countries without refining capacity will continue to import refined sugar.

The report projects that India will have enough supplies to maintain a high level of export, mainly in the form of white sugar, and would continue to be the world’s third largest exporter after Brazil and Thailand.

However, the government’s efforts to promote ethanol inclusion in petrol is likely to contribute to weaker growth in sugar export in the coming years as more sugarcane may be diverted for ethanol production, the report has cautioned.

Conceding that the outlook for India is subject to high uncertainties, the report goes on to state that even small changes in production or consumption may have a large impact on the world market. For example, changes in ethanol blending target or export-policy could impact the world market.

In the context of India’s sugar sector, there are some critical issues that deserve attention. These include water-intensity of crop, disposal of surplus sugar and export subsidy. As sugarcane is a water-guzzler, India cannot anymore ignore the looming water shortage. Currently the planted area for sugarcane is about 5.3 million hectares.

Last year, the government’s think-tank NITI Aayog recommended that the area under sugarcane deserves to be reduced by at least 300,000 hectares (see BL Commentary ‘Sugar sector reforms need political will’ August 19, 2020). Logically, such reduction should occur in low yield areas.

By exporting sugar, that too not without subsidy, we are actually exporting water indirectly, something eminently avoidable. The Indian sugar sector deserves end-to-end reforms so as to become globally competitive in the true sense of the term. However, the intense political interest in the sugar sector is well-known. Business-as–usual will compound the challenges in the years to come.

(The author is a policy commentator and global agribusiness specialist. Views are personal)

Published on July 21, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.