Sugar prices may rise next year as its production is expected to come down, while at the same time farmers are shifting to other crops with rising cane arrears, an Assocham study said.
As per latest estimates of sugar industry body ISMA, sugar output is expected to be at 27 million tonnes (MT) in 2015-16, compared with 28 MT estimated earlier in July and almost 5 per cent lower than 28.31 MT produced in 2014-15, an eight-year high, the study 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 added.
While the drop of around 12 lakh tonnes during 2015-16 may not impact domestic situation unduly, what is worrying is the expected drop in sugarcane production in 2016-17, as it is a long duration crop, it added.
The industry body also said that the country is facing shortfall of vegetable oils and pulses and a recurring monsoon failure might push the country into a tight corner with respect to sugar.
"Given the huge domestic demand for sugar, government needs to closely monitor both prices and stock situation. Already, a section of global exporting community is evaluating possibility of India entering international market for import of these commodities from 2017," the study added.
There must be a balance between interests of the growers and consumers. However, in several crops, there is a glut scenario in one season, to be followed by shortages in the next, it said.
"We need better crop and food management," the chamber said.
