India: Sugar Boom Threatens Industry
8 October 2007 The 2007/08 crop is expected to reach a record 31.8 million tons (including 435,000 tons of Khandsari sugar) on expected bumper cane production. The sugarcane production forecast is raised to a record 360 million tons on higher cane area (5.1 million hectares) and expected good yields due to good weather conditions in the major growing areas.
However, domestic prices of sugar continued to decline during 2006/07. The consecutive bumper years are forcing the Indian sugar industry to face a market glut and severe a financial crisis. Mills are unable to make cane price payments in a timely manner debt has grown significantly. The forecast record sugar production in MY 2007/08 will exacerbate the market glut by swelling sugar stocks to very high levels, lowering prices, and further hurting the financial position of the industry.
USDA-FAS notes several industry sources which report that at current prices, sugar mills are barely able to cover the cost of raw material (sugarcane).
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