Sugar production in India has hit an eight-year high, breaching a food ministry forecast for 2014-15. As per the latest data compiled by the Indian Sugar Mills Association (Isma), mills produced 27.85 million tonne sugar up to May 15, higher by 16 percent compared with 24 million tonne produced during the corresponding period in 2013-14. The production this year is the highest since 2006-07 when it was 28.4 million tonne.
State wise from the major sugar producers, Maharashtra produced 10.44 million tonne of sugar till May 15, by 35 percent from 7.72 million tonne in the corresponding period last year; Uttar Pradesh produced 7.08 million tonne till May 15, compared with 6.51 million tonne a year before, while output in Karnataka went up to 4.87 million tonne from 4.11 million tonne.
On the concern side, while the higher-than-expected output has further aggravated a glut in the market and continues to pressure ex-factory sugar prices, it has also resulted in huge cane arrears to farmers at over Rs 21,000 crore, which is almost 35% of the total cane price payable in the season. ISMA has demanded that the Centre should either clear cane arrears to farmers directly or purchase 3 MT of sugar from the millers at the earliest to help them in making outstanding cane payments.
Consumption too remained muted and while the sugar production is much higher than last year, despatches of the sweetener for domestic consumption during the current season until April 30 were almost at the same level of 14.6 million tone, although Sugar prices in the domestic market are highly depressed and are ruling at Rs 2,600 per quintal in northern parts of the country and at Rs 2,300 per quintal in southern and western parts of the country.
On the export front, due to depressed global prices, mills have exported only 4.6 lakh tonne of sugar (both raw and refined) until the first week of May. The government had earlier this year announced Rs 4,000 per tonne as subsidy for exports of 1.4 MT of raw sugar. Sugar year runs from October to September and the Sugar stock at the end of this season in September is estimated to touch 10.30 million tonne, the highest in the last six sugar seasons.