The cane sugar production was estimated at 21.9 million metric ton in 2017, which was lower by 8.4% from the previous estimate, and nearly 20% below 2016’s production. The India cane sugar market is expecting a strong comeback as compared to previous years due to increased percentage of good crop as compares to last year. With supporting government policies and increases crop area, India is expecting a peak in the sugar production. This will result in an 8% to 20% increase in cane sugar prices.
Disparity Between Sugarcane and Cane Sugar Prices Affecting the Market
There is a lack of uniformity between the sugarcane and cane sugar prices. All of this causes payment delays and encourages cyclicality. These situations usually give rise to the eventual necessity of various government support schemes, while the marked cyclicality subverts the sector’s profits. The average productivity with respect to sugarcane has also become a little stagnated, and the average retrieval is amongst the lowest when compared to other key sugar producing countries. There is also a problem of large sugar inventory exposure, which results in sugar price volatility, and in turn, high sugar price risks for the sector. The Maharashtra government is planning buying quarter of state sugar for price stability; the Maharashtra government plans to buy 25% from each mill. This will require USD 1 billion and support the mills.
Growth Opportunities in India
India is one of the largest agricultural countries, which makes it an ideal market to expand. With new regulatory policies and amendments in the older ones, there is greater chance for farmers and millers to increase their efforts toward cane sugar production and processing. Sugarcane is produced in nine states of India: Punjab, Uttar Pradesh, Maharashtra, Andhra Pradesh, Bihar, Gujarat, Haryana, Karnataka, and Tamil Nadu. The sugar industry supports an estimated 12% of the rural population in the above nine states through direct or indirect employment. The sugar industry is expecting the government to take a decision regarding scraping export duty on the commodity, in the wake of a forecasted record output for the second consecutive year.
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