Sugar is a very important sweetening agent that is widely used and traded throughout the world. It has gained its importance with time and now no cuisines in any culture can consider itself complete with sugar. Exceptionally, now a days Indian sugar Industry is finding its taste bitter. Record sugar production has resulted in a glut in the market, lowering prices and swelling up stocks, thus eroding the profitability of sugar mills and around 566 sugar mills in the country and all major sugar producing states which contributes 85% sugarcane production of the country consists Maharashtra, Uttar Pradesh, Karnataka, Tamil Naidu, Andhra Pradesh and Gujarat finding themselves in adverse conditions, where all sugar mills in the country are suffering from financial health problem. Consequently, the sugar industry is facing a severe financial crises resulting in delays in payment to the farmers. The industry has been pressuring the government to provide fiscal relief including an export subsidy to overcome the crises.
Domestic Price and Production Status:
The country is facing a sugar glut following a record harvest of more than 30 million tonnes in the 2006-2007 crop year ended September 30, while annual domestic demand stand at only 19 million tonnes. Where surplus stock stands at 11 million tonnes, which is 6.79% of global production. According to an earlier forecast by Indian sugar mills Association, sugar output in the 2006-2007 sugar crop year ending in September was anticipated to around 30 million metric tonnes, down from an ISO estimate of 33 million tonnes. This is primarily because, more sugarcane farmers in the main sugar growing state of Uttar Pradesh are shifting to wheat cultivation. Some sugar farmers have already started selling their sugarcane to mills less than half of the current state recommended price of Rs. 1250 -1300 per tonnes since they are keen to clear their land to start cultivating wheat for which minimum support price MSP has been increased. The current price of the domestic whole sale sugar at just around Rs. 12.50/kg is far below the cost of its production. It has plunged from around Rs. 18 -19/ kg in the last 12 months which ultimately resulting in disequilibrium in demand and supply, delay in payment to farmers, rise in inventory level, pressure on government, quarter to quarter rising losses to sugar mills.
World Sugar Market:
The World Sugar production stands at 162.63million tonnes, where 120 countries are contributed in the production, where major contributors are Brazil, European Union, Thailand, Australia, Cuba, India, United States and China. Where India had been the largest producer of sugar in the world for 7 out of 10 years but now Brazil has taken a lead from India.
INTERNATIONAL LEADERS IN SUGAR MARKET
Here both are contributing around 39% of the total production. As far as world sugar statistics are concerned, these are not even showing the positive node for the domestic industry. As it is evident from the table given below:
WORLD SUGAR BALANCE
Parameters 2006/07 2005/06 Change Change
in million tonne in %
Production 162.621 152.079 10.542 6.93
Consumption 153.506 149.859 3.647 2.43
Surplus/Deficit 9.115 2.220
Import demand 44.438 46.676 -2.238 -4.79
Export availability 47.492 46.689 0.803 1.72
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