India's 2019-20 sugar production is set to fall by 19% over previous year, industry body Indian Sugar Mills Association (ISMA) said in its first estimate of sugar production for 2019-20.
India is expected to produce 268.5 lakh tonne sugar in 2019-20 as against 331.61 lakh tonne produced in the previous year.
A release from ISMA said: "The total sugar production during 2019-20 SS would be around 268.5 lakh tonne without considering the impact of sugar reduction due to diversion of B heavy molasses/ sugarcane juice to Ethanol."
In July 2019, ISMA had released its preliminary estimates of sugar production at 282 lakh tonne for 2019-20 SS, based on the first survey of satellite mapping carried out in June 2019, assuming normal South West Monsoon in 2019. Diversion of B-heavy molasses and sugarcane juice was then not considered for their impact on sugar production, the report added.
On the basis of the second set of satellite images of sugarcane crop acreage across the country procured in the latter part of October 2019, ISMA has now estimated the total cane acreage at 48.31 lakh hectares, which is about 12% less than 2018-19 SS on pan India basis of 55.02 lac ha.
ISMA now reviewed its first advance estimates of sugar production for 2019-20 sugar season considering the estimates of sugarcane acreage, yields, recovery, cane drawal, rainfall and other relevant factors.
"As per satellite images of October 2019 and the fact that we did not have normal rainfall, sugar production during the current 2019-20 SS is expected to be lower than what was expected about 4 months back. The crop in the two main sugarcane growing states -- Maharashtra and Karnataka -- which contribute around 35-40% of country’s sugar, have been adversely impacted due to various reasons," said the industry body's press release.
The sugarcane acreage in Uttar Pradesh, the leading sugarcane and sugar producing state in the country is seen to be slightly lower, as compared with 2018-19 SS. Taking into account the crop condition, weather conditions and area under the high yielding cane varieties in the state, an improvement in yield per hectare is expected. Hence, sugar production in UP in 2019-20 SS is estimated to be around 120 lakh tonne, which is more or less at the same level of 118.21 lakh tonne produced in 2018-19 SS.
As per preliminary estimates in July 2019, cane area of Maharashtra was seen lower by about 30% for 2019-20 SS, on account of drought last year in Marathwada and Solapur.
Floods affected important cane growing areas Kolhapur, Sangli, Satara and Pune in August – September 2019. Due to water logging in cane fields for long duration, some of the cane has been destroyed completely, while some areas have been partially affected in terms of yield and recovery. Hence, cane area for 2019-20 harvesting has further dropped to 7.76 lac hectare (ha), against what was reported about four months back. It is thus about 33% less than last year’s acreage of 11.54 lac ha.
Some sugarcane fields in uplands will benefit in terms of yield per hectare as well as recovery, due to better water availability during the very important grand growth period. Taking into account all the above factors, sugar production is, therefore, estimated to drop nearly 40% to around 62 lakh tonne in 2019-20 SS, as against 107.20 lakh tonne produced in 2018-19 SS.
Similar to Maharashtra, there was poor rainfall in 2018 last year in the cane growing areas of Karnataka, reducing the acreage therein for 2019-20 SS. Further, incessant rains in first fortnight of August, 2019 also affected the area contiguous to Maharashtra i.e. North Karnataka mainly in Belgaum and Bijapur Districts.
Thus, area under sugarcane in 2019-20 SS is expected to be about 3.99 lac. ha as against 5.02 lac ha. in 2018-19 SS, which is lower by about 21%. Considering the various factors as stated above, sugar production in 2019-20 SS is estimated to be around 32 lakh tonnes as against 44.30 lakh tonnes produced in 2018-19 SS.
There has not been any major changes in the other sugarcane growing States of the country. The rainfall therein has been more or less as expected. Hence, these States are expected to collectively produce about 54.5 lakh tonne of sugar in 2019-20 SS, almost at the same level as in the previous season.
"The tender for ethanol procurement for 2019-20 SS is expected to be opened by the OMCs very shortly. As per informal reports, this year the bid for the Ethanol produced from B heavy/sugarcane juice would be higher. As per market information, it is estimated that around 8.5 lakh tonnes of less sugar will be produced because of the diversion of cane juice and B-molasses into ethanol. Therefore, the resultant sugar production estimates for 2019-20, after considering this diversion into ethanol, will be around 260 lakh tonnes of sugar. The exact diversion can be better determined once the bids are opened by the OMCs and, therefore, if required, ISMA can revise the figures," the release said.
Sugar production during 2018-19 sugar season was 331.61 lakh tonne. As per reports submitted by the sugar mills to the government, sugar sales during 2018-19 sugar season was 246 lakh tonne. It has been seen that there are some sugar mills which sell more than the monthly sale quota given by the government to them, for various reasons including the pressure to pay cane price to the farmers and also because huge working capital is blocked in the high sugar inventory. There are reports from the market that another 8-9 lakh tonnes of sugar would have got sold over and above what has been reported by them to the Government. Therefore, the sugar sales by the sugar mills during 2018-19 season is estimated to be 255 lakh tonnes.
Considering the opening balance of 107 lakh tonne as on 1st October 2018 and sugar and exports of around 38 lakh tonne and sugar sales of 255 lakh tonne, the closing balance as on 30th September 2019 is estimated to be 145.81 lakh tonne.
Against the new export policy of MAEQ of 60 lakh tonne, several sugar companies have already finalized contracts for exports and in the month of October 2019 alone, it is learnt that about 7 to 8 lakh tonne of sugar exports have been contracted far.