Debt Trap Sugar Economy

The output of sugar in India will likely reach a record this year as adequate rainfalls helped better yields in the world’s largest sugar consumer.

An estimated production of 31.5 million metric tons is on the charts said Abinash Verma, director general of the Indian Sugar Mills Association. Previously, in march the estimation was 29.5 million tons and previous record of 28.36 million tons in 2006-97, according to the data provided by association.

After the September 2015 price mayhem, it is forecasted that prices may take a hit again due to a better & bigger harvest in the world’s second biggest sugar. Global sugar prices that came down to more than 30% in the past year could fall further. In oder to reduce inventory and maintain the price equilibrium, South Asian nation needs to export more, Verma said in a telephone interview.

Sugar production could exceed the country’s yearly demand by 6.5 million tons if compared to the estimated 4.5 million tons in March, Verma said. “The only way to reduce inventory is to export some of the output. Rain at the right time and right quantity helped increase the yields.”

Higher exports

Increase in production and constant down-turn in prices have pressured government to allow sugar exports under the duty-free import plan, while setting a mandate for sugar mills to ship 2 million tons overseas under a minimum indicative quotas program that allocates export quotas.

The sugar factories are stuck in between & need help from the government to compensate farmers without delay as sugar mills are making a loss of about