India's sugar production in 2022-23 (Oct-Sep) is unlikely to drop as no loss in yield is expected in the sugarcane crop, Indian Sugar Mills Association President Aditya Jhunjhunwala said.

The association estimates sugar output in the season beginning Oct 1 at 36.5 mln tn, 2% higher than the previous year. "We are sticking to the output estimate until our next review meeting in January," Jhunjhunwala said.

Last week, news agency Reuters had reported that the country's sugar output was likely to fall 7% this year due to a hit to cane yields from unfavourable weather conditions.

Refuting this, Jhunjhunwala said, "There could be a decline in output for Maharashtra but not for the entire country."

This season, sugar production in Maharashtra is estimated at 13.5 mln tn, less than last year. In 2021-22, the total area under sugarcane in the state was 1.4 mln ha and sugar production was at 13.7 mln tn.

Talking about other major producing states, Jhunjhunwala said there wouldn't be any major difference in sugar output in Karnataka compared to last year. In Uttar Pradesh, sugarcane recovery had improved and this hinted at higher production, he added.  

Due to delayed rains, the sugar season began somewhat late this year and, therefore, it was too early to estimate the output, he said. As mills had started crushing in full swing since the past 15-20 days, the association would take time to gauge the crop situation, he said, adding that production figures would be reviewed by mid-January. 

While domestic prices have dropped by 1 rupee a kg in the last few days, ISMA expects prices in international markets to be stable in the medium term. Diversion of cane towards ethanol production in Brazil would play an important role in this, the ISMA president said.

"There is a deficit of sugar in the international market, but we have to see how India will fill up the gap," he said. The surge in global prices would depend on the ongoing energy crisis and the Russia-Ukraine war, he said.

The crop in Brazil is showing an improvement compared to last year, according to ISMA. The harvest season in Brazil will begin in March and production in the 2022-23 marketing year is estimated to be higher.

Talking about Thailand, another major producer, he said the crop there was likely to be better than in 2021-22. "This year, 2-3 mln tn sugar will likely be exported from Thailand."

EXPORT FRONT

The Centre has allowed the export of up to 6 mln tn of sugar in 2023, and said that the quantity for the future would be reconsidered after reviewing the country's sugarcane production.

Jhunjhunwala said contracts for the export of 4.2-4.5 mln tn of sugar have already been signed. In December, 1.0-1.2 mln tn sugar is expected to be exported.

"Depending on shipments, we are expecting to exhaust 6 mln tn of export quota by April," he said. "February will be a good time for the government to take a call on announcing the second tranche of exports."

In the next two months, exporters aim to dispatch at least 3 mln tn of sugar. "The shipment should be completed between February and March."

The ISMA president said that sugar production in November was more than a year ago, and that the opening stock in October was about 5.9 mln tn, while as of November-end, the figure was around 6 mln tn.

DIVERSION TO ETHANOL

By the end of the season, around 4.5 mln tn of sugarcane is expected to be diverted towards ethanol.

ISMA plans to increase ethanol production to 10 bln ltr in the next three years. It is working towards higher production of sugarcane by expanding acreage and boosting yield. With high yields, payments to farmers would be smooth and timely. This, in turn, would enhance the availability of sugar and more sugarcane could be diverted towards ethanol blending.

"Brazil diverts 56% of their sugarcane towards ethanol, while India is still at 10%," Jhunjhunwala said. "We need the government's support to build new capacities and distillers for enhanced ethanol blending."

ISMA has urged the government to increase the minimum support price of sugarcane to 35-36 rupees per kg from the current 31 rupees. "The fair and remunerative price for sugarcane has been increased thrice in the past three years, while the minimum support price has not been revised once," the ISMA president said.  

In Maharashtra, sugarcane prices are at 32 rupees per kg, much below the cost of production. The state governments of Maharashtra, Karnataka and Uttar Pradesh, three key producers, have also urged the Centre to increase the MSP to 36 rupees.  End