* Output may fall to 20-21 mln T in 2013/14
* Annual sugar demand pegged around 23 mln T
* Drought hits new plantation, ratoon crop
* Cane for 2013/14 may be diverted for fodder
By Rajendra Jadhav
MUMBAI, Feb 11 India's sugar production for the
2013/14 season is set to fall below consumption for the first
time in four years as a water shortage trims acreage in three
The drop could boost global sugar prices as
the world's top sugar consumer imports raw sugar to maintain
stocks and to take advantage of lower prices in Brazil.
"Farmers in Maharashtra, Karnataka and Tamil Nadu are
switching to other crops. If we look at prices, cane is
attractive, but water is not available," said a Mumbai-based
official with a global trading firm, who declined to be named.
Figures from the Indian Sugar Mills Association show that
the western state of Maharashtra and southern Karnataka and
Tamil Nadu are likely to produce 12.2 million tonnes, or more
than half of India's total production, in the 2012/13 season,
which ends on Sept. 30.
India, the world's biggest sugar producer after Brazil, is
likely to produce a total of 24.3 million tonnes of sugar in the
current year, compared with demand of about 23 million tonnes.
It would then need imports over the following season to
maintain opening stock levels for the year starting Oct. 1,
2014, dealers said.
Though the country is likely to start the year starting
October 2013 with stocks of 7.5 million tonnes, it would want to
maintain these levels going into the next year.
After the 2009 drought sugar production fell sharply,
forcing India to make big purchases from overseas markets, which
pushed the price of raw sugar futures to 30-year highs.
"It is difficult to estimate sugar output for next year. It
depends on the diversion of cane for fodder, monsoon rains and
recovery rate," said the trading firm official, who declined to
be named. "Right now, we can say around 20-21 million tonnes can
In 2012 state governments bought cane to offer cheaply or
free as fodder when alternative supplies were short because of
lack of rain. Cattle become the main source of income for
farmers during drought years.
The fodder shortage is likely to rise between March and June
this year, raising demand for mature cane as fodder.
"Total cane area in Maharashtra and Karnataka will be down
20 to 25 percent for next season," said Narendra Murkumbi,
managing director of Shree Renuka Sugars, the
country's biggest sugar refiner.
New plantation is down by nearly 50 percent in both states,
"Drought is affecting new plantation and it will even cut
availability of the ratoon crop next season," D B Gavit, a
director at the Maharashtra Sugar Commissioner's office, said.
The ratoon crop is the root stub of cane after the first
harvest that remains in the ground for a second harvest. It
usually accounts for more than a third of total cane production.
The water shortage in the central region of Maharashtra is
so severe that people are struggling to secure drinking water,
but the situation is better in the northern state of Uttar
"Uttar Pradesh will compensate for some of the production
losses in Maharashtra and Karnataka. It is not facing a water
shortage," said Kamal Jain, managing director of sugar brokerage
Kamal Jain Trading Services.
Uttar Pradesh is expected to produce 8.1 million tonnes of
sugar in 2012/13.
(Reporting by Rajendra Jadhav; Editing by Jo Winterbottom and