Sugar prices rise up to Rs 5 a kg in just five months

New Delhi (PTI): Sugar prices in the country have surged by up to 25 per cent so far this season, starting October 2008, in expectation that the output of the sweetener may slump following a shortfall in the availability of cane.

According to data available with the Consumer Affairs Ministry, retail prices of the sweetener in major cities were ruling in the range of Rs 22-25 a kg as on February 19, compared with Rs 19-21 as on October 1.

An industry analyst said, "The prices started firming up, especially after July last year amid anticipation that the production may decline substantially in the 2008-09 season.

Sugar prices rose by a maximum of 25 per cent to Rs 25 a kg in the national capital as on February 19 this year, compared with Rs 20 in the beginning of October 2008.

In Mumbai, the prices shot up by Rs 3.50 a kg to Rs 24 while in Kolkata, sugar sells at Rs 23 a kg, up by Rs 2, during the review period. Consumers in Chennai witnessed the rates rising to Rs Rs 22 a kg from Rs 19 in October.

Not just metros, sugar prices in some other major cities provided no respite. The prices in Lucknow shot up by Rs 3 a kg to Rs 24 while in Bhubaneswar the rates have risen by Rs 2.50 to Rs 22.50 a kg a year ago. In Patna, too, the prices have jumped to Rs 21 a kg from Rs 20 during the review period.

However, a top executive with a leading sugar company said, "Any price above Rs 21 a kg is realistic this season because we are spending Rs 16 on cane and Rs 5 as conversion cost to produce one kg of sugar."

Bumper production and huge stocks pulled down the prices last year, he said. If prices are kept lower than the cost of production, farmers won't get enough remunerative returns for their produce, he added.

According to government estimates, India's sugar output is projected to slump to 18 million tonnes this season, compared with 26.4 million tonnes last season, though industry officials say it might decline further.

On his part, Food and Agriculture Minister Sharad Pawar has assured that the domestic requirement would be met as the country has about 11 million tonnes from the last year's stocks. India requires about 22.5 million tonnes of sugar in a year for its domestic consumption.