India, The World's Second Largest Sugar Producer, May Need to Import by 2025

tendata blogTrade Trends News

ten data blog20-12-2023

india sugar,india sugar import,india sugar imports

India is the second largest producer of sugar and has been a net exporter of the sweetener for the past six years.

However, exports will be banned for the crop year starting in October and imports may even be forced the following year as farmers switch to other crops, according to traders, industry officials and farmer interviews.

The western state of Maharashtra and its southern neighbor, Karnataka, and the northern state of Uttar Pradesh, which account for more than 80 percent of India's sugar production, have been hit by El Niño, with unusually dry weather leading to a drop in output.

In the year to September, India produced 33.1 million tons of sugar, second only to the 46.9 million tons expected from Brazil.

India supplies 12% of global sugar trade. It has exported an average of 6.8 million tons of sugar over the past five years, making it the second largest exporter over the same period. It was overtaken by Thailand last year.

The Indian Sugar Mills Association said in August that net production for the year starting in October could fall to 31.7 million tons.

More than 180 farmers from 11 sugarcane-producing districts in Maharashtra state and another 49 from Karnataka state all told Reuters that reduced monsoon rains during the crucial growing phase had hampered crop growth. Reuters spoke to at least 10 farmers in the two most productive areas of the state. India has about 50 million sugar farmers.

Reuters calculated the decline in sugarcane yields per acre and the extent to which sugarcane area may fall next year, an average derived from responses from farmers scattered across the main growing regions and planting different types of sugarcane varieties. Some varieties mature in 10 months, while others take up to 18 months.

Internal forecasts for this year's output from five trading companies range between 29 million and 30 million tons. This year's output could fall 12.2 percent to 29.05 million tons, Reuters calculations based on farmer interviews found.

Production could fall further next year, with three forecasts in the range of 25 million tons to 26.9 million tons, also in line with Reuters calculations for 26.6 million tons of output.

India's sugar consumption is forecast to reach a record 29.2 million tons this year and rise to about 30 million tons the following year, according to traders.

In the state of Maharashtra, reduced rainfall has led to an average 16 percent drop in sugarcane production, according to farmers, with some areas experiencing as much as a 40 percent drop.

According to a government official, a 10 percent reduction in sugarcane area in Maharashtra, coupled with the possibility that 2 percent of the crop may be used for fodder and crude sugar production, will result in a 28 percent reduction in net sugar production in the state to 7.55 According to Reuters calculations, it will reach 1 million tons this year.

According to a survey of farmers, Karnataka will have 13% less area under sugarcane this year and production is expected to fall by 25%. This suggests that sugar production could fall to 3.7 million tons.

However, Uttar Pradesh's production is expected to grow by 9.7% to 11.5 million tons this year due to better irrigation conditions, while next year, it will rise to 12.4 million tons due to lower conversion of sucrose for ethanol, according to trading companies.

Farmers in the two states' main growing areas, who are grappling with water shortages, told Reuters they planned to either cut back on sugarcane cultivation or abandon it altogether.

Calculations based on their feedback suggest that the marketing year starting October 2024 could see a 32 percent reduction in sugarcane area in Maharashtra and a 29 percent reduction in Karnataka. Several factors including monsoon rainfall next year will ultimately determine the crop yield.

Reduced sown area could lead to a drop in production to 5.1 million tons in Maharashtra and 2.6 million tons in Karnataka next year, which would be the lowest levels since the 2016/17 crop year.

The supply of lodging crops is also expected to fall as many farmers have been forced to uproot their plants due to water shortages. Lodging is the residue of sugarcane roots after the first harvest, left in the ground to wait for the second harvest.

Maharashtra mills said sugar recovery (the amount extracted from sugarcane during milling) was lower than normal due to higher temperatures.

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