Mumbai: Higher sugar cane prices are prompting Indian farmers to increase acreage, which may lead to an up to 30% rise in cane availability in 2009-10 and check soaring sugar prices, industry insiders said.
In the crop year ended September 2008, farmers got lower prices for cane due to a glut in the world market, forcing them to trim acreage leading to lesser sugar output in 2008-09.
Sugar production in the year ending 30 September may total 18 million tonnes (mt), compared with 20mt forecast in December, farm minister Sharad Pawar said on Tuesday.
Spot sugar prices in top producer Maharashtra have risen by one-tenth in the last two months. Cane farmers in the state are receiving up to Rs120 per 100kg, up 41% against Rs85 a year ago.
“Farmers across India got very good price this year. So one could logically assume they would plant more cane,” said Rakesh Bhartia, chief executive of India’s biggest sugar miller Bajaj Hindusthan Ltd
Area under winter-planted cane is rising in Maharashtra, Prakash Naiknavare, managing director of Maharashtra Co-op Sugar Factories Federation Ltd, said. “The rise in acreage will partly benefit in 2009-10 and partly in 2010-11. We can see 30% rise in acreage in 2009-10.”
In Uttar Pradesh, the second biggest producer, large-scale planting is expected from February, said Shyam Lal Gupta, secretary, UP Sugar Mills Association.
“We are expecting all the cane acreage lost would be recovered in 2008-09 as farmers may come back to sugar cane following a rise in the cane price,” he said.
Karnataka, the third largest producer, is also expected to improve its acreage, said M.R. Desai, member of Karnataka State Federation of Co-op Sugar Factories Ltd.
Maharashtra, UP and Karnataka together produced an estimated 19.3mt of sugar in 2007-08, more than 73% of the estimated domestic output of 26.3mt.
Pratik Parija of Bloomberg contributed to this story from New Delhi.