Indian sugar mills reeling under a glut have failed to compensate cane farmers and this is likely to divert cultivation area to more profitable oilseed and pulses trade, industry officials said.
Millers in the world’s second biggest producer of the sweetener are battling to stay afloat with prices in main cane growing regions like Maharashtra sinking below the cost of production.
Domestic prices have plunged 25-28% to Rs12,000-13,000 per tonne from last year. International prices have fallen to $310-330 (Rs12,700-13,500) per tonne in the last few days from last year’s $500 peak.
“At this time, the farmers’ confidence in sugar cane is very low. It will surely affect fresh cultivation,” said Prakash Naiknavare, managing director, Maharashtra Federation of Co-operative Sugar Factories. “In 2007-08, area under sugar cane cultivation will go down by 15-20%,” he said. Last year total area under the crop in India was 4.5 million hectares.
In India, cane is mainly cultivated in Uttar Pradesh, Maharashtra, Tamil Nadu, Karnataka, Andhra Pradesh and Gujarat. These states are also leading producers of oilseeds and pulses.
“Farmers will definitely shift from sugar cane to other crops,” said Rajesh Agrawal, spokesman of the Soybean Processors’ Association of India. “Oilseed is a good option as its prices are quite attractive and they will remain firm on the back of tight international market,” he added.
In 2007-08 at least 500,000 hectares of cane area in country will be diverted to other crops and at least half will go to oilseed, Agrawal said.
“Now prices of pulses are high and cane farmers may consider it as a cash crop,” said K.C. Bhartiya, president of Pulses Importers Association.
The Union agriculture ministry data shows when cane output rose to 287.38 million tonnes (mt) in 2002-03, oilseed fell to 14.83mt. When cane production fell to 233.86mt in 2003-04, oilseed jumped to 25.18mt.
Though there is an inverse relationship between the two, it will take some time for the impact of the shift in cultivation to be felt.
“We will see the impact of lower sugar cane cultivation only in 2008-09 crushing season. Cane for the coming crushing season is already planted,” Naiknavare said. Cane is harvested after 18 months. “We can see real shift in 2008-09 as many farmers take ratoon crop of sugar cane,” said Nitin Kalantri, a trader based Maharashtra.
Ratoon is the root stub of cane after the first harvest that remains in the ground to grow again for a second harvest.REUTERS