New Delhi: India's new sugar season will begin with much lower stocks and production will be hit by lower sugar recovery from cane after the failure of monsoon rains, Agriculture Minister Sharad Pawar said on Tuesday.
"We will be starting the next sugar season from October 1, 2009, with a much smaller opening balance in comparison to the previous year," he told a conference.
Last week, the head of the National Federation of Cooperative Sugar Factories Ltd, JB Patel, said India's opening stocks would be at 2.7 million tonnes, down three quarters from 10 million tonnes on October 1, 2008.
On Monday, views from a top executive at Simbaoli Sugars echoed the forecast.
India's dwindling stocks and rising demand have helped raw sugar futures surge to the highest in nearly three decades on prospects of large purchases by the world's top sugar consumer.
Weak monsoon rains, a quarter short of normal so far, have further raised supply concerns in India.
"The country is passing through a difficult situation due to insufficient monsoon. This has not only affected sowing of important crops like paddy but may also adversely impact sugar recovery," Pawar said.
Many Indian farmers abandoned cane cultivation last year as they found wheat more attractive after the government raised the purchase price for the grain handsomely.
India had exported 5 million tonnes of sugar last year, but it swiftly turned into a large importer to counter low supply and rising prices.
Pawar said the country suffered at both ends of the sugar cycle.
"When India exported prices fell and we had to support exports. And now when India is importing, prices have risen,"
Pawar said the country needed to raise the productivity of its cane crop to improve the situation.
"The solution is to increase cane productivity. We cannot have more area under cultivation," he said.
Sugar industry officials say the government should lift controls on the sugar sector to correct the demand-supply mismatch.
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