2012/13 sugar output forecast to drop 4% as drought hits

India’s sugar output is expected to drop about 4 percent this year due to a drought that hit the cane crop in Maharashtra state, said the head of a leading producers’ body, but production should still be enough to cover domestic demand.

India, the world’s second biggest sugar producer behind Brazil, should produce about 25 million tonnes of sugar for the year ending Sept. 30, down from 26 million tonnes in 2011/12, according to estimates from the National Federation of Cooperative Sugar Factories.

“Maharashtra’s sugar production will be higher than initial expectations despite the cane crop getting hit by poor rains in some parts of the state,” said Kallappa B. Awade, president of the cooperative.

India, also the world’s biggest sugar consumer, will not need to turn to imports as the output will still cover annual demand of around 22 million to 23 million tonnes, Awade said.

Current estimates of sugar output from Maharashtra have risen to 8 million tonnes, compared with output of 9 million tonnes from the state in the previous year. Earlier estimates had forecast that the drought would drop Maharashtra’s production to 6.3 million tonnes due to the drought.

Output prospects have also improved from the northern Uttar Pradesh state, another leading producer of sugar cane in the South Asian country.

In Uttar Pradesh, the producers’ body estimated output at 8 million tonnes of sugar, about one million tonnes higher than an initial projection.

Indian millers at the start of the season in October contracted to import about 1 million tonnes of raw sugar expecting that there would be a larger decline in production. About 300,000, tonnes of the imports have so far been processed for domestic sale.

India imposes a 10 percent duty on imports of raw and white sugar, and the producers’ cooperative again called for a rise in the tariff over concerns raised by the expected fall in output.

“The existing duty needs to be raised as high as up to 30 percent to restrict chance of any huge imports of white sugar,” said Vinay Kumar, managing director of the organization, which is responsible for nearly half of the country’s sugar output.

Kumar said India so far not imported any huge quantity of white sugar though some millers in the northwest had imported about 18 tonnes of the sweetener from Pakistan.

Imports of about 500,000 tonnes of sugar from Pakistan in 2012 had earlier sparked calls for an increase in the import duties.

Most mills will stop crushing cane by mid-April, after which the government is expected to revise its sugar production estimates for the current year.

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