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Updated 10:05 IST 01 Sep 2014

To contain the glut problem, sugar industry has urged the government to create buffer stock for sugar and promote the direction conversion of cane juice into ethanol.India has recently hike the sugar import duty form 15% to 25% in an effort to curb the imports. Industry people say this has reduced the import woes but failed to support prices.

In a bid to help the crisis-stricken sugar mills, India has raised the sugar import duty to 25% f..

According to Milan Shah, agri research analyst at Commodity Online, over all trend for Sugar NCDE..

A hike in PDS has not been mulled over since 2002 even when Sugar prices have surged up over the ..

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Know Sugar

India has been known as the original home of sugarcane and sugar. India is the second largest producer of sugar in the world after Brazil and produces more of cane sugar and not beet sugar. It produces approximately 22 million tons of sugar annually, with Maharashtra contributing over one-third of it.

Indians knew the art of making sugar since the fourth century. However the advent of modern sugar industry in India dates back to mid 1930's when a few vacuum pan units were established in the sub-tropical belts of Uttar Pradesh and Bihar.

Until the mid 50s, the sugar industry was almost wholly confined to the states of Uttar Pradesh and Bihar. After late fifties or early sixties the industry dispersed into Southern India, Western India and other parts of Northern India.

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The sufficient and well distributed monsoon rains, rapid population growth and substantial increases in sugar production capacity have combined to make India the largest consumer and second largest producer of sugar in the world.

Indians by nature have a sweet tooth and sugar is a prime requirement in every household. Almost 75% of the sugar available in the open market is consumed by bulk consumers like bakeries, candy makers, sweet makers and soft drink manufacturers.

Khandsari sugar is less refined and is typically consumed by sweet makers. Gur, an unrefined form of lumpy brown sugar, is mostly consumed in rural areas, with some quantities illegally diverted for alcohol production.

The quantum of sugar produced by a mill is determined by the factors like daily crushing capacity, duration of crushing season and percentage of sugar recovery.

The crushing season in the country starts from October and reaches its peak in January before finally ending in March or April of the next year. But based on cane availability, the start of the crushing season may postponed by one to one and a half months in different states of the country.

The period of November to March (150 days) is an ideal one for sugar recovery in general, more particularly in Bihar and Utter Pradesh. From April onwards, sugar recovery shows a downward trend and in June the percentage of sugar recovery comes down to lowest levels.

The sugar production in the country fluctuates widely based on sugarcane availability in the country. S-30 grade sugar has the maximum production in the country constituting around 72% of the total production. The remaining 24% is of M-30 and the rest is from L-30 and the other different grades under 29 series.

The realization to sugar mills from government levy quota is called levy prices. Levy prices are fixed by the GOI based on SMP for the year. But usually levy prices are very low and fall below the cost of production.

Therefore the producers are left with only free sale sugar quota to run the business profitably.Central Government fixes the Statutory Minimum Price (SMP) of sugarcane for each sugar season under the Sugarcane (Control) Order, 1966 for each sugar factory.

SMP is fixed on the basis of the recommendations of the commission on Agricultural Costs & Prices (CACP ).Some State Governments announce State Advised Prices (SAP) for sugarcane for their sugar factories. SAPs are higher than SMP. SAPs are not fixed on any scientific basis. SAPs are not statutorily binding.

Sugarcane is produced in around 120 countries of the world and the world’s total production of sugar figures around 135 to 145 million tons. Brazil stands at the top regarding the production level followed by India and the European Union.

Over 3/4ths of the total sugar produced is consumed domestically in the countries in which it is produced, and the rest is traded around the globe which is often termed as World Sugar. The world exports of sugar hover around 40 million tons and the leading sugar exporting country is Brazil exporting to around 55% of its total produce.

Brazil is followed by European Union, Thailand, Australia and Cuba in this list. These top five exporting countries constitute almost 65% of the world total exports. Australia’s dependency on its sugar exports is much higher than that of any country as it exports over 75% of its total sugar production.

Unlike exports, imports of sugar are diversified in nature, among more than 100 countries. The sugar imports account to around 38 million tons. The leading sugar importing country is Russia with an average of 6 million tons, followed by Indonesia, European Union, Japan and Korea

The production of sugarcane in India has increased during the last ten years and is still on an increasing trend. The productivity of sugarcane in the northern areas of the country is lower than the productivity in southern areas. In India, sugar is grown over 4 million hectares of land.

Sugar is considered an essential item and its weight in wholesale price index is very high. In physical markets of Delhi and Muzaffarnagar lackluster trade is seen due to subdued demand. On International markets, white sugar prices at LIFFE and raw sugar prices at New York traded with some positive sentiments on improved demand and support from international crude oil prices.

For 2008-09 (Oct 08- Sept 09) production may remain near 20 – 22 MMT. Annual domestic demand may remain near 20 to 21 MMT. Export is estimated to remain near 43 lakh tones in this season. FAO estimates world sugar production for 2007-08 to remain at 168 MMT; 2 MMT above the previous season. Production is expected to exceed consumption by up to 9.8 MMT. Global sugar consumption in 2007-08 is estimated to remain near 158.2 MMT; 4.2 MMT more than in 2006-07.

Brazil, the largest sugar producer is expected to increase its cane use by 57 % for ethanol production.

Refiners in Europe are expected to process 15 % less because a 2004 trade ruling bars growers from exporting surplus.

1. This year the area under sugarcane is nearly 44.10 lakh ha as against 53 lakh ha last year. Thus sugar production in the sugar year 2008-09 (Oct 08- Sept 09) may drop near 20 – 22 MMT. Current year production is estimated near 26.5 MMT. India’s annual domestic demand may remain somewhere around 20 to 21 MMT. Sugar exports have significantly increased this year. Export is estimated to remain near 43 lakh tones in this season, of which white sugar contributed 18 lakh tones and raw sugar over 24 lakh tones. The major buyers of raw sugar include countries like UAE, Saudi Arabia, Egypt, Malaysia, Indonesia and Bangladesh. In the next sugar year, the export may decline as domestic production is expected to remain below this year and the export assistance offered by the government will not continue. On global front, as per the FAO, the international sugar prices have risen by 30.7 per cent since November despite the fact that the sugar supply was comfortable and major producers like India faced a severe problem of surplus sugar. International Scenario

2. Global Sugar Production: FAO estimates world sugar production for 2007-08 to remain at 168 MMT; 2 MMT above the previous season. Production is expected to exceed consumption by up to 9.8 MMT, contributing to a build up of global inventories. Brazil could produce more sugar but diversion of sugarcane towards production of ethanol may increase significantly. In Europe sugar output in the EU-27 rose slightly to 17 MMT in 2007-08, following favorable growing conditions which boosted yields. The EU hopes to cut production by 6 MMT over the four years of its sugar restructuring programme. Production in the Russian Federation and Ukraine is also expected to decline.

3. Global Sugar Consumption: Global sugar consumption in 2007-08 is estimated to remain near 158.2 MMT; 4.2 MMT more than in 2006-07 due to rise in consumption in Asia, Latin America and the Caribbean. The increase in consumption is associated with rising per capita income, strong demand from the food and beverage sectors and weaker competition from alternative sweeteners. Consumption in the EU-27 is forecast to remain stable since markets are saturated and population growth is limited. In the US there is expected to be a greater use of sugar in food and beverage processing.

4. World Sugar Trade: The FAO report forecast world sugar trade to reach 45.6 MMT in 2007-08 (Oct- Sept) slightly lower than the 2006-07 trade estimates due to lower imports by some countries due to higher production in the traditional importing countries. Imports by the EU-27 could reach 3.2 MMT in 2007-08, nearly the same level as in 2006-07 by the EU-25.