Sugar output to rise by 4% in FY08

Sugar production in India is estimated to grow by 3.9 per cent at a record 293 lakh tonnes in 2007-08 against 282 lakh tonnes last season on high sugarcane output, the US Department of Agriculture (USDA) has said in a report.

The Department's forecast is, however, lower than the industry's estimate that puts sugar output at over 300 lakh tonnes in sugar year starting this month. Agriculture Minister Sharad Pawar had said last week that the sugar production was likely to increase by 5-7 per cent this year.

India's sugar production forecast is raised to a record 293 lakh tonnes on expectations of bumper cane production, an USDA official said.

Maharashtra would contribute the highest with an estimated output of 98 lakh tonnes in 2007-08, followed by Uttar Pradesh with 87 lakh tonnes, Karnataka 27 lakh tonnes and Tamil Nadu 25 lakh tonnes, according to the report.

In 2006-07 season, Maharashtra produced 90.8 lakh tonnes while UP's sugar output stood at 85.3 lakh tonnes. Production of Karnataka and Tamil Nadu stood at 26.5 lakh tonnes and 24.5 lakh tonnes respectively.

The Department noted that the country's sugar industry faced a market glut resulting in severe financial crisis and the forecast of another bumper production would cause further problem.

"The forecast record sugar production in 2007-08 will exacerbate the current sugar market glut by swelling sugar stocks to very high levels, lowering sugar prices, and eroding the financial position of the industry," it said.

The USDA pegged India's sugar exports at about 28 lakh tonnes in 2007-08 against estimated 16.8 lakh tons last season.

"Large carryover stocks, forecast of record production and government export incentives should lead India to be an aggressive sugar exporter during 2007-08," it observed.

However, the Department said India's export prospects are tempered by low global sugar prices, high cost of production and strengthening rupee.

On consumption, USDA said the country's domestic demand would be 215 lakh tonnes this year against 200 lakh tonnes in the last season.