New Delhi: India, the world’s second biggest sugar producer after Brazil, may resume imports of the sweetener after four years as farmers plant less sugar cane because of declining prices.
Purchases of raw sugar may total 4 million tonnes (mt) in the year starting October 2009, S.L. Jain, director general of the Indian Sugar Mills Association, said in a phone interview in New Delhi.
Low returns: Due to falling prices, farmers are planting less sugar cane
India hasn’t imported sugar since 2005, he said.
“Imports are imminent as a shortage is knocking at your door,” said Jain. Output may fall as low as 17mt in 2009-10, from an estimated 22mt in the previous year. Resumption of imports by India may help ease a global glut that has slashed prices.
Raw sugar slumped 15% last month in New York and is the sixth worst performer this year on the UBS Bloomberg Constant Maturity Commodity Index. Farmers in Uttar Pradesh and Maharashtra, the biggest cane-growing states in India, are switching to other crops including paddy and oilseeds as sugar mills delayed payments of as much as Rs3,200 crore, Jain said.
The Supreme Court last month asked sugar mills in Uttar Pradesh to pay farmers Rs110 for 100kg of cane this year, less than the state government advised.
“We will plant rice instead of sugar cane because we didn’t get a good price,” said Ashok Kumar, a farmer in Bharangpur, about 80km east of New Delhi. “Why should the court decide the price? It’s between farmers and the mills.”
Kumar, 50, plans to sow rice on 5 acres of his 8 acres land. Satender Singh, Kumar’s neighbour, will halve the acreage planted to cane to 8.5 acres.
India’s 50 million sugar-cane growers are paid a price set by state governments. The price is typically higher than the minimum set by the Central government and is aimed at shielding farmers, a powerful voting block.
A smaller crop in India may reduce exports, helping “even out” the global glut, likely lifting prices, Jain said. Exports may fall to between 2.0mt and 2.5mt in the year starting 1 October, from an estimated 4mt tons in year ending 20 September, he said.
The worldwide surplus may reach 3.29mt in the year ending 30 September 2009, sugar broker and researcher Kingsman SA said on 30 May.
Output in Brazil, the biggest producer, also fell this year after rains pared yields and mills ensured supplies of ethanol, industry group Unica said.
India may produce 26.5mt of sugar in the year ending September, Jain said.
Mrinalini Datta in New Delhi, Liza Lin in Singapore and Marianne Stigset in Oslo contributed to this story.