Bhubaneswar: When RBI in its recently released monetary policy had revised upwards its inflation projection for FY 25 at 4.8%, mainly for the high vegetable and edible oil prices, the report of 44% fall in sugar production in the first six weeks of the 2024-25 sugar season (begins from Oct) has heightened the risk of price rise of this natural sweetener in coming New Year. 

It needs mentioning here that the Indian Sugar & Bio-energy Manufacturers Association (ISMA) in its preliminary outlook for the 2024/25 sugar season has already made a reduced production forecast. 

SUGAR PRODUCTION DIPS

Presenting its yearly outlook, the ISMA has said, “Gross sugar production is expected to reach 33.3 million metric tonnes (MMT), representing a 2% decrease from the previous season.”

As per ISMA, the big reason behind the decline in production is mainly attributed to a projected 6% reduction in acreage area of sugarcane – which is forecasted to drop to 56.08 lakh hectares due to adverse weather conditions over the past year.

AGAINST 2% DROP, HOW COME 44% FALL?

A glance at the data with National Federation of Cooperative Sugar Factories Limited, as of November 15, 2024,

• Crushing for the 2024-25 season was underway in 144 sugar mills across the country.
• A total of 90.74 lakh tonnes of sugarcane has been crushed,
• Resulting in the production of 7.10 lakh tonnes of sugar.

In comparison, during the same period in the 2023-24,

• 264 sugar mills had crushed 162.56 lakh tonnes of sugarcane,
• Yielding 12.70 lakh tonnes of sugar.

This 44% dip in sugar yield in the country has stoked the high risk of sharp price rise of this natural sweetener – Sugar – across the country in coming New Year. 

FOOD MINISTER ALLAYS PRICE RISE FEAR

In Parliament, however, MoS Food NJ Bambhaniya attributed the following reasons behind such a steep fall in sugar production during the first 6-weeks (Oct-Nov). 

• Though the Sugar Season has started from Oct, the crushing starts as per the maturity of sugarcane crop. 
• This year in the states of Maharashtra and Karnataka, the sugarcane growth is slow due to the paucity of water and it will take more time to mature.
• In order to avoid the harvest of immature sugarcane. Maharashtra and Karnataka States have decided that the crushing operation for the year 2024-25 should commence from November 15^th onwards.
• Therefore, the production till Nov 15 dropped by 44%.

Here is state-wise production of Sugar as on Dec 4, 2024

The data above puts the sugar production in the country as on Dec 4, 2024 at 28.73 LMT. The Sugar production has increased to 28.73 LMT from 12 .7LMT within in 19 days period.

IMPACT REPORT

As per ISMA outlook, despite this reduction, India is anticipated to start the 2024/25 season with a substantial opening stock of 9.05 MMT. It is expected that the total availability of sugar for the season will be around 42.35 MMT.

This projection is based on the estimated domestic sugar consumption of 29 MMT and the ethanol diversion, which reached 2.0 MMT during the 2023/24 season. With the government’s Ethanol Blending Program, this diversion is anticipated to increase further in the 2024/25 season, although official numbers have not yet been released.

Therefore, the closing stock is projected to be approximately 13.35 MMT, which is more than sufficient to meet domestic needs and support the country’s Ethanol Blending Program, as well as potential exports in early 2025.

In Lok Sabha, the Ministry of Food, too, has allayed the fears of any rise in prices of sugar in the country in coming days. As per the Ministry, Sugar production in the country is sufficient to cater the domestic requirement.