Excessive sugar in our body affects our health. Excessive sugarcane output is hurting the farmer’s health who are already lean and do not consume much of what they grow. The bumper crop output for second consecutive year in Brazil, the world’s largest sugar producer and India, the second largest sugar producer, took the sugar prices down from Rs 50+ per kg to the levels below Rs. 30 per kg.
Sugar consumption or demand growth is in the range 5-10% year on year. But on the supply side, crop output is cyclical and in the last two seasons crop output is 50% higher than usual. Also, the extraction rates (percentage of sugar out of sugarcane) is also improving. That damaged the sugar prices significantly.
The optimum price level needed is Rs.40 per kg for both farmers and sugar mills to survive. Govt. has announced few relief measures that lets the farmers barely survive but the profitability is out of scope. Since the sugar stocks are already high in warehouses, best way out of this is to export them. There are few takers like China who import sugar in large quantities. There are trade wars and sanctions which may act as a hindrance yet whatever can be moved out needs to be done quickly.
Alternate markets for sugarcane like Ethanol, which is used as a bio-fuel, also molasses making for liquor industry are not encouraging as those markets are limited in size and can’t consume the million tons of additional crop output.
If no effective solution is found soon, farmers are likely to stare at huge losses. They better limit the acreage for this crop in future and move on to other non-cyclical crops. Considering sugar cane is water guzzler crop, it would be good to discourage as that much of water can be used for other productive purposes. Lower prices of sugar are already driving farmers toward discarding it. Had they reduced the acreage after one bumper harvest last year, they would have avoided the mess they got into now. I wish our farmers make more informed decisions.
Sugar consumption or demand growth is in the range 5-10% year on year. But on the supply side, crop output is cyclical and in the last two seasons crop output is 50% higher than usual. Also, the extraction rates (percentage of sugar out of sugarcane) is also improving. That damaged the sugar prices significantly.
The optimum price level needed is Rs.40 per kg for both farmers and sugar mills to survive. Govt. has announced few relief measures that lets the farmers barely survive but the profitability is out of scope. Since the sugar stocks are already high in warehouses, best way out of this is to export them. There are few takers like China who import sugar in large quantities. There are trade wars and sanctions which may act as a hindrance yet whatever can be moved out needs to be done quickly.
Alternate markets for sugarcane like Ethanol, which is used as a bio-fuel, also molasses making for liquor industry are not encouraging as those markets are limited in size and can’t consume the million tons of additional crop output.
If no effective solution is found soon, farmers are likely to stare at huge losses. They better limit the acreage for this crop in future and move on to other non-cyclical crops. Considering sugar cane is water guzzler crop, it would be good to discourage as that much of water can be used for other productive purposes. Lower prices of sugar are already driving farmers toward discarding it. Had they reduced the acreage after one bumper harvest last year, they would have avoided the mess they got into now. I wish our farmers make more informed decisions.
Thank you for sharing this wonderful blog with us.This is really helpful and informative blog. keep sharing these kinds of blogs.
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