Indian sugar mills reeling under a glut have failed to compensate cane farmers and this is likely to divert cultivation area to more profitable oilseed and pulses, trade and industry officials said.
Millers in the world's second-biggest producer of the sweetener are battling to stay afloat with prices in main cane growing regions like Maharashtra sinking below the cost of production. Domestic prices have plunged 25-28 percent to 12,000-13,000 rupees per tonne from last year.
International prices have fallen to $310-$330 per tonne in the last few days from last year's $500 peak. "At this time, the farmers' confidence in sugarcane is very low. It will surely affect the fresh cultivation," Parakeet Naiknavare, managing director, Maharashtra Federation of Co-operative Sugar Factories, told Reuters. India's farm ministry data shows when cane output rose to 287.38 million tonnes in 2002/03, oilseed fell to 14.83 million tonnes.
When cane production fell to 233.86 million tonnes in 2003/04, oilseed jumped to 25.18 million tonnes. Though there is an inverse relationship between the two commodities, it will take some time for the impact of the shift in cultivation to be felt.
"We will see the impact of lower sugarcane cultivation only in 2008/09 crushing season. The cane for coming crushing season is already planted," Naiknavare said. Cane is harvested after 18 months. "We can see real shift in 2008/09 as many farmers take rattan crop of sugar cane," said Nissin Cilantro, a trader based in Latter, Maharashtra.
Raton is the root stub of cane after the first harvest that remains in the ground to grow again for a second harvest. Prices of edible oil and pulses have risen sharply in 2006/07 on domestic shortfall and tight international markets.
Comments
Comments are closed for this article.