Sugar output to drop by 7%: Industry lobby

Sugar production during the 2016-17 season is likely at 23.37 million tonnes because of 5% lower plantings compared to the previous year, says ISMA


Anticipating lower production, the government has already restricted overseas sale of the sweetener by putting a 20% tax on exports. Photo: Bloomberg
Anticipating lower production, the government has already restricted overseas sale of the sweetener by putting a 20% tax on exports. Photo: Bloomberg

New Delhi: Sugar production in India is set to drop 7% on account of lower plantings in Maharashtra and Karnataka, industry lobby Indian Sugar Mills Association (ISMA) said in its first advance estimates released on Wednesday.

Sugar production during the 2016-17 season is likely at 23.37 million tonnes because of 5% lower plantings compared to the previous year, according to ISMA.

However, the drop in production in unlikely to affect domestic availability in the 2016-17 sugar season that ends in October next year as there will be a carry-over stock of 5.2 million tonnes. For 2015-16, the carry-over stock is estimated at 7.5 million tonnes.

India consumes about 25.6 million tonnes of sugar every year.

Domestic sugar prices are likely to remain firm in the coming months because of an expected decline in production and stocks, and a global deficit scenario driving up international prices, rating agency Icra said on Wednesday.

According to Icra, domestic prices have remained firm and increased from around Rs31,500 per tonne in March to Rs36,000 per tonnes in August and continue to hover around similar levels in September.

Sugar prices are expected to remain firm despite the centre imposing stockholding limits and export duty but a further significant price rise is unlikely, Icra said.

According to ISMA, Maharashtra farmers planted 23% less area under cane, which will lead to 25% lower production in 2016-17 compared to a year earlier; in Karnataka the corresponding declines are 19% and 22%, respectively.

However, Uttar Pradesh, the second largest sugar producing state after Maharashtra, is likely to see a 12% jump in production, from 6.84 million tonnes in 2015-16 to 7.66 million tonnes in 2016-17. The rise in production is due to rising acreage under high yielding varieties and no decline in planting area.

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