India Sugar Crop May Reach 25 Million Tons, DCM’s Shriram Says

Indian sugar output may be at least 25 million metric tons “this coming year,” outpacing demand, said Ajay S. Shriram, chairman of DCM Shriram Consolidated Ltd., a New Delhi-based producer of sugar and fertilizer.

The forecast is preliminary because the monsoon has yet to start, he said in an interview in Paris today. India’s sugar season starts Oct. 1. Demand will be about 24 million tons, Shriram said.

“We have good availability,” said Shriram, who spoke at a meeting organized by the International Fertilizer Industry Association, of which he is president. “We won’t have to bank on international prices.”

Sugar futures plunged 46 percent in New York this year on prospects for rising output in Brazil and India, the largest suppliers. Raw sugar for July delivery traded at 14.5 cents a pound at 12:35 p.m. in New York, less than half the 30.4 cents it traded at in February.

India’s sugar output may reach 24 million tons in the year starting Oct. 1, Vivek Saraogi, managing director at Balrampur Chini Mills Ltd., the nation’s second-biggest miller, said May 27. Production may expand to as much as 25 million tons, Narayan Raman, president of investor relations at the nation’s biggest producer Bajaj Hindusthan Ltd., said May 11.

DCM buys cane from about 200,000 farmers in the state of Uttar Pradesh. About 60 percent of the company’s business is agriculture related, according to Shriram.

‘Potential for Improvement’

“For a country like India, where a large part of the population lives off agriculture, the potential for improvement and change, and the opportunities, are very large,” he said. “If production and yields go up it will benefit everyone.”

The company set up a program last year to help 5,000 sugarcane farmers in Uttar Pradesh increase yields by 25 percent over three years.

“The best way for farmers to adopt improved technology is through demonstrations,” he said. “Unless farmers can see a change, they find it hard to believe. We want these 5,000 to be convinced. Then they become the ambassadors.”

The government should consider relaxing its controls over the sugar industry now that supply has increased, Shriram said.

In Brazil and Thailand, the cost of cane accounts for about 65 percent of the sugar price, while in India the ratio fluctuated between 50 percent and 75 percent last year, Shriram said. Cane costs accounted for 90 percent of the Indian sugar price in 2008, he said.

With assistance from Luzi Ann Javier in Singapore and Thomas Kutty Abraham in Mumbai.

Editor: Stuart Wallace

source: bloomberg