India’s sugar output would fall short of consumption for the first time in seven years, due to poor rainfall this crop year, traders and a survey of farmers anticipated. As a result, the world’s second-largest producer may have to import sugar the following year due to decreased plantings.

India is expected to outlaw sugar exports in 2024, as evidenced by the weak crop year forecast for October, which was caused by declining yields in two important producing States, Maharashtra and Karnataka.

Industry data indicates that during the current crop season (October-September), India’s raw production was recorded at 12.75 lakh tonnes (lt), down 37% from 20.20 lakh tonnes during the same period last year.

Even though this season’s crushing began earlier than in past years, the lower cane juice recovery in Maharashtra might not be entirely offset by the higher recovery in Uttar Pradesh, which could result in a decrease in the amount of crop produced this year.

According to Prakash Naiknavare, Managing Director of the National Federation of Cooperative Sugar Factories (NFCSF), “the pace of actual cane and sugar production is slower than last year, even though the new cane crushing season has started a bit early across the country.”

Because of climate change and the El Nino influence, Naiknavare had predicted that this season’s cane and sugar production would be lower than last year’s.

India’s decline in Sugar Production

Based on the survey, Reuters calculated that output could decline this crop year and the following, in line with traders’ internal projections. A surge in consumption is anticipated throughout that time.

Industry experts told Reuters that although the poll only includes a small sample of farmers in important locations, it demonstrates mounting pressures that could lead India, which provides 12% of the world’s sugar trade, to become a net importer as early as the first half of 2025. This would be a significant reversal.

The possibility that India would have to import sugar for the first time since 2017 if this year’s crop fails to meet projections might raise world prices, which already reached multi-year highs last month. Brazil, the leading exporter, is probably going to win.

A request for comment regarding the forecasts was not answered by India’s Department of Food and Public Distribution.
The Indian Sugar Mills Association stated in August that net production for the crop year that started in October could drop to 31.7 million tons. India produced 33.1 million metric tons of sugar in the crop year that concluded in September.

India Plans on Curbing Ethanol Production from Sugarcane

As it struggles with shortages locally, India, the world’s top consumer of ethanol made from sugar cane, has been contemplating about reducing its manufacturing capacity.
The ban on using cane juice for ethanol was predicted to increase India’s sugar production by about 2.5 million tonnes in 2023–2024, according to rating agency CRISIL.

It has immediately prohibited the direct manufacturing of ethanol from cane juice. As the world’s greatest consumer of the sweetener struggles with shortages at home, India is thinking of reducing the amount of ethanol produced from sugar cane.

According to sources with knowledge of the situation, who wanted to remain anonymous since the talks are private, authorities are looking into a proposal to restrict the amount of cane juice used to make biofuel during the current season. The people stated that no final decisions have been taken and that plans are subject to change.

If accepted, the idea would help alleviate local consuming shortages. However, on Wednesday, futures in New York fell as much as 7.9%, the most in ten months. Additionally, it would destroy India’s chances of importing the sweetener.

The second-largest sugar producer in the world, India, had to prolong export limits into October 31 due to poor rainfall that damaged sugarcane fields in the country. Indian sugar reserves wouldn’t decline much more if ethanol production was restricted, according to Michael McDougall, managing director of Paragon Global Markets.

According to the people, the proposal may have a limited effect even though it could assist India control food inflation. This is because, according to the people, some ethanol has already been sold at a tender earlier this year and will need to be manufactured.

The challenge lies ahead for the government to not only check the consumption locally but also, the much chaotic price hike that needs to be attended. Both the producers and consumers are looking for a solution from the Centre.