In my last review I was quite optimistic about the change and progress Indian sugar industry was experiencing, but sadly it was very short lived and today when I look at the numbers it reminds me of same story of last booms and busts every 3-5 years..... The way India's production numbers are falling outsiders are making joke of it and saying that "we never change". Ironically during 2008/09, India was indeed an exporter of sugar, about 5 million tonnes of sugar were exported, including 2.9 million tonnes of raw sugar. Now this year we are Net Importer and have already contracted 1.5mmt primarily from Brazil. I estimate that we should close this season with about 17.5mmt with consumption of about 23mmt.
As we talk to states MH is down about 45% to 5.1mmt, UP at about 4.8mmt and rest others also declining in more or less same %age.
Sugarcane farmers have been paid really well this season which will prompt them to grow more cane in future and hence 2009/10 looks to be a better years in terms of availability.
Imports have already started (Early contracts were made @ $310-340 per mt) which today looks a real good buy. World market reacted to Indian demand and gone up sharply to touch $400 per mt recently.
I personally feel very sad about the way we operate such critical industry to take some political mileage and capture vote banks. Rather there is a strong need to empower farmers to grow more crops not only sugarcane but more of wheat, soybean, cotton etc to ensure that our 70% population, which lives in village and is depending on agriculture, propels the economic growth to take us through this recession...
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