ISMA revises sugar production estimate for 2016-17 at 203 lac tonnes

Indian Sugar Mills Association(ISMA) had earlier estimated 213 lac tonnes for sugar season 2016-17, however drought in some areas brought yield down by 40 to 50 %

ISMA revises sugar production estimate for 2016-17 at 203 lac tonnes

The sugar industry body-ISMA said that due to droughts in leading sugar producing states, yield in January and February 2017 was down by 40 to 50 percent which contracted the estimates for 2016-17 sugar season (SS) from previous 213 lac tonnes to 203 lac tonnes.

ISMA had previously estimated sugar production for the current season at 213 lac tonnes in its meeting January 2017. However, yield of the sugarcane harvested in January and February 2017, in Maharashtra, Karnataka, Andhra Pradesh and Telangana, which were badly affected by the drought that the States faced in the last couple of years, turned out to be substantially lower to what was being expected. In some areas, the yield per hectare in the month of February 2017 was 40 to 50 percent lower than last year at the same time.  In addition to this, higher need of seed for increased acreage, especially in the state of Maharashtra, also resulted in lower sugarcane availability for crushing this season.

Accordingly, ISMA felt that there was a need to revise the sugar production estimates in the current season. After detailed discussions and after considering the views of members representing respective states, ISMA is of the opinion that the sugar production in 2016-17 SS would be around 203 lac tonnes.

The mills in Maharashtra have almost closed their crushing operations except 17 mills and, therefore, the state is expected to produce around 42 lac tons. Similarly, the mills in Karnataka have also closed their crushing operations, but considering that it will have a special season from July to September, 2017 in South Karnataka, it is expected that the State will produce 21.25 lac tonnes. 

However, sugarcane availability, sugarcane yields, as well as sugar recovery in Uttar Pradesh is substantially better than last year. The trend in Uttar Pradesh is, therefore, very different to the drought affected states in Western and Southern part of the country. Sugar production this year is 9 lac tonnes more than what it was at the same time last year.  Most of the mills are expected to run till the latter part of April 2017. ISMA members from the state felt that they will together produce around 85 lac tonnes of sugar this season.

On the other hand, the sugar sales and off take from sugar mills is substantially lower as compared to last year. Instead of seeing an increase in the sales, the mills are witnessing a drop in the same in comparison to last year. 

According to ISMA, in the first 4 months of the current season i.e. upto end of January 2017, sales by sugar mills has been lower by 7.5 lac tonnes. The sugar off-take was dull and, therefore, the off-take in February as well as in March, is also on the lower side. “The main reason for lower sales could be demonetization, drop in sugar purchase by the bulk consumers, price elasticity affecting demand and anticipated lower demand by State Governments because of proposal to remove subsidy from Central Government on PDS sugar.  Therefore, as compared to last year’s sugar off-take of 248 lac tons, we now expects that the sugar sales this season will be between 238 and 240 lac tonnes,” ISMA spokesperson said.

Considering the opening balance of 77.5 lac tonnes, and considering an estimated sugar production of 203 lac tonnes in the current season and consumption of 238-240 lac tonnes, the closing balance in the current season would be 40 to 42 lac tonnes. This balance will be enough to meet the domestic requirement till almost end of November 2017.

ISMA said that if the opening stocks of sugar on 1st October 2017, is enough to meet the interim period, by which new sugar is available in the market, there is absolutely no need to supplement the domestic availability with any sugar imports. 

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