India ideally placed to tap global sugar market

With sugar prices witnessing fluctuations due to cyclic nature of the industry, high cane price is no longer sustainable at present with significant fall in refined sugar. N Ramanathan, president of South India Sugar Mills Association and managing director of Ponni Sugars spoke to FE’s R Ravichandran on varied issues. Excerpts:

What is your perspective on sugar industry at present?

With huge deficit looming large during 2009-10, sugar prices were buoyant during early part of the season. This persuaded sugar millers to offer higher cane prices that were not only above Fair Remunerative Price (FRP) but also State Administered Price (SAP) . Farmers were quick to respond to price signal and with adequate monsoon rains, sugar production this year will increase in comparison to last year.

Sugar production for 2010-11 is varyingly estimated between 24 million tonne and 27 million tonne. The impact of excess rain and flooding in parts of Uttar Pradesh remains to be gauged.

Do you foresee any impact due to surplus production in the current sugar season?

Sugar production in excess of domestic off-take is normally negative for the industry to depress sugar prices. Curiously, Indian sugar production has this time converged with tightness in world market due to bad weather impacting sugar production in many countries. Currently export realisation is well above domestic price. Once normal exports are opened, domestic price will stabilise.

What is the present situation at export front?

Brazil is the dominant player in global market and has been single handedly meeting the increasing demand. The dry weather this time is, however, putting a cap on their expansion. Adverse weather in China and Russia and unprecedented flooding in Pakistan have escalated import demand. India is ideally placed to tap this situation.

source: financialexpress