Sugar Price May Not Be ‘Sweet’ Next Year:ASSOCHAM
19 November, Hyderabad
The sweet spot in sugar prices seen this year may not last and the glut in one season resulting in mounting arrears to sugarcane growers and shifting of farmers to other crops would lead to drop in production in the next 6 to 12 months, ASSOCHAM cautioned in in its study report.
According to the latest industry estimates, sugar output is expected to be 27 million tonnes in 2015-16, compared with 28 MT as estimated earlier in July and almost 5 per cent lower than the actual output of 28.31 MT, an eight-year high in 2014-15, reveals the ASSOCHAM study.
The key reasons attributed to loss in production in Maharashtra and Karnataka are lower recoveries and yield losses due to erratic monsoon in 2015.
The drop of around 12 lakh MT during 2015-16 may not impact domestic situation unduly, but expected drop in sugarcane production in 2016-17, as it is a long duration crop, it said.
Prolonged El-Nino impact might adversely affect cane production in the coming year. Besides aggressive sugar export strategy with declining domestic production is likely mount pressure on domestic prices from 2016 summer, the study said.
Some analysts are skeptical about 2015-16 estimate of sugar production and place it close to 25-26 MMT or just sufficient to meet domestic consumption needs. Hence, government needs to manage the situation taking into account domestic needs and availability to ensure that sugar prices which have remained low in the current year do not follow the trajectory of pulses and onion next year, said Mr. D S Rawat, Secretary General ASSOCHAM.
As per the October CPI, sugar prices have dropped by annualized over 10 per cent, but the situation may not stay in this sweet spot for consumers, said Rawat.
There must be a balance between the interest of the growers/producers and the consumers. However, in several crops, we are confronted with a glut scenario in one season, to be followed by shortages in the next. We need better crop and food management, the chamber said.