Sugar surplus likely to hit industry

PUNE: The International Sugar Organisation's estimate about 45 lakh tonne surplus in the global market is set to hit the Indian sugar industry, including Maharashtra.

The Indian Sugar Manufacturers' Association has said that the Indian sugar industry has so far produced 1.04 crore tonne of sugar till January 15 in the current season, which is around 17 lakh tonne more than the production in the same period in 2010. Sugar production during that year was 87.68 lakh tonne.

Sugar production in states like Uttar Pradesh, Maharashtra and Karnataka, is 22% more than what it was the previous year. The country is set to produce 2.6 crore tonne sugar this year. Moreover, 59 lakh tonne stock from last year still remains. As against this stock, the domestic consumption is estimated to be 2.4 crore tonne. The excess stock of some eight million tonne is likely to bring down the prices in the domestic market.

Speaking to TOI from Delhi, Sanjay Banerjee, head, media and communication of Indian Sugar Manufacturers' Association, said, "The increased supply from Thailand, rise in domestic sugar production in Pakistan and Russia, and surplus production in western European countries - which was so far an importer of sugar - has made the international market sluggish. There is little chance of international prices going up." He added that Thailand's estimated production is 1.01 crore tonne, where as the domestic consumption of the country is around 25-30 lakh tonne.

The number of sugar factories in India crushing sugarcane as on January 15, 2012 was 516 in comparison to 498 as on January 15, 2011. The annual turnover of the Indian sugar industry is Rs one lakh crore of which Rs 55,000 crore is spent on sugarcane payment, said Banerjee.

Ajit Chaugule, managing director of Maharashtra State Cooperative Sugar Factories' Federation Ltd, said, "The current international prices of sugar are around Rs 28,000 per tonne as against Rs 27,200 per tonne in the domestic market. No sugar exporter will release the stock in the market at such low profit margin. The Union government on December 2 permitted a quota of 10 lakh tonne for exporting sugar, of which orders for four lakh tonne have been issued so far. However, it is not known as to how much of it has actually been shipped out of the country."

He added, "The export orders can be executed within three months from announcement. But due to the discouraging market trends, the industry is likely to face a critical situation."

source: TOI