India's Sugar Output Expected To Be 32 MT Per yr Till 2020.

Sugar production in India, the world's second biggest producer and largest consumer, is expected to be on an average 32 million tonnes (MT) per year for the next 10 years, says a latest report.

According to the Agriculture Outlook prepared jointly by Paris-based OECD and UN body FAO, global output of sugar is expected to soar to 209 MT in 2020-21 as against 158 MT in 2010-2011.

"India is expected to boost production substantially to 32 MT of sugar per year, on average, in the coming decade, or some 50 per cent higher than 2008-10, when the production fell sharply," according to the report.

The Organisation for Economic Cooperation and Development (OECD) is a 34-member grouping of mostly developed nations, including the US and Germany.

According to the latest outlook, annual sugar output of India will continue to depend on periodic large swings in the production cycle, where 2-3 years of surplus is followed by 2-3 years of deficit, it said.

After a jump to 30.1 MT in 2006-07, the country's sugar output declined to 15.2 MT in 2008-09 and is currently estimated at 28 MT ( in raw value) for 2010-11, it added.

As per the report, the sugar demand in India has been growing steadily at about four per cent per year over the past 10 years. Therefore, the domestic production and consumption balance moves from periods of surpluses and deficits, leading to often significant changes in the trade position.

On global front, the OECD-FAO report said the world's sugar output is likely to increase by 50 MT to reach over 209 MT in 2020-21 in response to the rising demand of sugar and its by-products and relatively high market prices.

The bulk of the additional sugar output will come from the developing countries and the main burden of growth will continue to fall on Brazil, the world's biggest sugar producer, it said.

"The potential for expanding sugar production in India exists and can be fully exploited if adjustments were introduced to ensure a market driven relationship between sugar and sugarcane prices," it added.

Suggesting India to relax some of the existing measures such as the monthly releases, the report said, "This could provide sugar factories some cash flow flexibility".

Regarding decontrol of the Indian sugar sector, the report said: "The liberalisation of the sugar industry can only be undertaken within the context of broader domestic reforms, because of the linkages on both demand and supply sides that prevail in agricultural commodity markets".

On sugar prices, the report pointed out that "major uncertainies remain in the international sugar market".

In the light of the relatively tight world market situation at present, any major production disruptions in the main producing countries of Brazil and India, could radically change the market outlook in the near term, igniting further bouts of high volatility, it said.

Source : financialexpress.com