How does the Indian sugar industry work

Sugar production in India meets demand again

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According to the US Department of Agriculture (USDA), Indian raw sugar production in the 2005/06 season was almost 21 million tonnes, around a third above the level in the two previous marketing years.

For the first time in two years, production exceeded the average annual requirement of a good 20 million tons of raw sugar. The cause of the increase was primarily an expansion of the sugarcane acreage by 0.5 million hectares to 4.1 million hectares. But the average yield was also higher due to extensive rainfall in the monsoons.

With the increase in production, India was able to export sugar in appreciable quantities again. Exports are likely to have reached around 1.1 million tons in 2005/06. while imports went to zero. In the previous season, India was still dependent on imports of 2.1 million tons. At the same time, Indian stocks fell to a good four million tons of sugar. That was a good half less than two years earlier.

Due to the comparatively high prices on the world market, the USDA anticipates a strong expansion in sugar cane cultivation for the 2006/07 season. With an average harvest, raw sugar production this season could amount to 25 million tons. That would lead to a high export potential. The domestic stocks could also be replenished. (ZMP)