1 / 12Export Ban Looms: India, the world’s second-largest sugar producer, has been a net exporter of the sweetener for the past six years. However, it is set to ban exports in the crop year that started in October and may even be forced to import in the following year as farmers turn to other crops, according to a Reuters report.
2 / 12El Nino Impact: The decline in production is driven by unusually dry conditions, fuelled by El Nino, in the western state of Maharashtra and its neighbour to the south, Karnataka. These states, along with Uttar Pradesh in the north, account for over 80% of Indian sugar output.
3 / 12Farmers’ Plight: Reuters spoke with more than 200 farmers during a recent visit to Maharashtra and Karnataka. More than 180 farmers from 11 cane-producing districts of Maharashtra and another 49 farmers from Karnataka all told Reuters lower monsoon rainfall during the crucial growth phase stunted crop development.
4 / 12Production Figures: India produced 33.1 million metric tons of sugar in the year that ended in September, behind only Brazil’s expected 46.9 million tons. India supplies 12% of globally traded sugar. It has exported an average of 6.8 million tons of sugar over the past five years, making it the No.2 shipper in that period.
5 / 12Future Predictions: Internal forecasts from five trading houses for this year’s output range between 29 million and 30 million tons. Reuters calculations based on farmer interviews found output could drop 12.2% this year to 29.05 million tons. Output could fall further the following year, with three houses predicting a crop in the 25 million to 26.9 million ton range.
6 / 12Consumption Trends: India’s sugar consumption is set to hit a record 29.2 million tons this year, rising to roughly 30 million tons the following year, according to traders’ forecasts.
7 / 12Maharashtra’s Decline: In Maharashtra, lower rainfall has led to a 16% average drop in cane yield, with some regions experiencing declines of up to 40%, according to farmers. A 10% decline in cane area, coupled with potential diversions for fodder and jaggery-making in 2% of the crop, would lead to a 28% reduction in net sugar production in the state to 7.55 million tons this year.
8 / 12Karnataka’s Struggle: Karnataka faces a 13% reduction in cane cultivation area and anticipated yield drops of 25% for the current year. This indicates a potential decline in sugar production to 3.7 million tons. Farmers across key growing areas of the two states, grappling with water scarcity, plan to either reduce cane cultivation or abandon it totally.
9 / 12Uttar Pradesh’s Growth: However, Uttar Pradesh, with better irrigation, is expected to deliver a 9.7% increase in output to 11.5 million tons this year, rising to 12.4 million tons next year due to lower sucrose diversion for ethanol.
10 / 12Future Predictions: Calculations based on farmer feedback could result in a potential 32% reduction in Maharashtra’s sugarcane area and a 29% decrease in Karnataka’s for the marketing year starting October 2024. Several factors, including rainfall in next year’s monsoon, will ultimately determine the crop size.
11 / 12Production Challenges: Shrinking planting could slash Maharashtra’s production next year to 5.1 million tons and Karnataka’s to 2.6 million tons, their lowest since the 2016/17 crop year. The availability of ratoon crop is also expected to drop as many farmers were forced to uproot the plants because of water scarcity. Maharashtra mills reported that the sugar recovery rate is lower than normal due to higher temperatures.
12 / 12Government Decisions: For the 2023/24 period, the government’s recent decision to limit diversion of sugar up to 1.7 million tons for ethanol production has been factored in. For 2024/25, it is presumed the government will prohibit ethanol production from B-heavy molasses and cane juice/syrup.
