Thanks to the low rainfall in major sugar-producing states of India, such as Maharashtra and Karnataka, the country's sugarcane yield has declined by approximately 40 per cent this crushing season. As a result, sugar prices have skyrocketed in both the wholesale and retail markets.
In 2011-12, Maharashtra alone produced about 705 lakh tonnes of sugarcane and approximately 90 lakh tonnes of sugar. This year the output of sugarcane and sugar have dropped to approximately 525 lakh and 70 lakh tonnes respectively. However, India has been the second largest producer of sugar in the world for the last two years.
Since the beginning of 2012, the rate of sugar has consistently been increasing. The rate of sugar, which was Rs 32 per kg in Janaury 2012, has increased to Rs 42 to Rs 43 in the retail market and from Rs 34 to Rs 39 in the wholesale market. Obviously, the common man will feel the pinch, as he would have to shell out Rs 5 more this festive season.
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Vijaysinh Mohite Patil, chairman, Maharashtra State Co-operative Sugar Factories Federation Ltd, said, “Since this year, Maharashtra has received low rainfall and has also faced a drought-like situation. In some sugarcane-producing regions, the production of both sugarcane and sugar is expected to be less.”
“Last year, Maharashtra produced over 700 tonnes of sugarcane and 90 lakh tonnes of sugar. This year the expectation is 450-460 tonnes of sugarcane and 60 tonnes of sugar,” he said, adding, “Since the production is less in both Maharashtra and Karnataka, obviously the burden will be on both commercial sugar consumers and households.”
“We will review the situation after the crushing season is over at the end of November and then take the appropriate steps,” informed Mohite Patil.
K N Nibe, managing director, Shri Pandurang Sahakari Shakhar Karkhana, said, “The reduction in the production of sugarcane and sugar will have a impact on the sugar prices. The burden of sugar hike will be on both domestic players who use sugar in large quantity for their products as well as consumers. The rate of sugar will increase by Rs 5 in both the retail and wholesale markets.”
M R Shinde, statistician, Vasantdada Sugar Institute said, “Since the production of sugarcane in Maharashtra is less the crushing season will be shorter. The government has already given the notification for it. The government will be offering Rs 1,700 per tonne for basic recovery of sugar, 9.5 per cent premium on rising recovery and Rs 1.79 per quintal for 0.1 per cent sugar recovery. The rate of recovery of sugar is the biggest concern.”
Sanjay Banerjee, head, media and communication, Indian Sugar Mills Association (ISMA), said, “The impact will not be more on consumers as well as domestic players. The loss incurred by Maharashtra and Karnataka will be covered by Uttar Pradesh. Uttar Pradesh has produced more sugarcane this year and I don't think that the price of sugar should be hiked in other states. A Rs 1.50 hike is not a big deal and the impact won't be that big because we have ample amount of sugar.”
He added, “In Maharashtra, which is the highest producer of sugarcane in India, production is projected to be 55 lakh tonnes in comparison with the previous year's yield of 90 lakh tonnes. The gap will be filled by Uttar Pradesh, whose production is projected to be 78 lakh tonnes. The crushing season will start after Diwali. When the labourers return to work after the Diwali vacation, we will review the situation and accordingly see that what steps can be taken. About 65 per cent of sugar is used by the industrial consumers, 10 per cent is levied and the rest is used by normal consumers, so there will be no big impact on the common man.”
Banerjee informed, “Sugar in India is a politically sensitive commodity. It is only industry which is totally controlled by the government. We are far better than Pakistan; the retail price of sugar in Pakistan is Rs 90 per kg. If the government lifts the levy, sugar millers, farmers and consumers will be benefited. Due to the levy, millers are losing interest and closing the mills. If the C Rangarajan Committee's recommendations are accepted by the government, the industry will save Rs 3,000 crore and thus farmers will benefit.”
Arvind Varma, secretary general, Indian Beverage Association (IBA), said, “The sugar hike is due to less production of sugarcane in Maharashtra and Karnataka, and this type of phenomenon is unexpected. Different companies will be having different strategies. Sugar and sugarcane production has the tendency to be phenomenal over several years. All the domestic players know how to deal with the situation.”
K V Thomas, minister of state for consumer affairs, food and public distribution said, “The biggest reason for the increase in the price of sugar in the public distribution system is that the product does not reach the beneficiary, as it is siphoned off by middlemen.”
