Sugar production in India is set to drop by 7% this year: Report

India's sugar output is likely to fall 7% this year as erratic weather conditions have cut cane yields, which could dampen exports from the world's biggest producer, Reuters reported, quoting millers and traders.

Lower sugar exports from India, also the world's second-biggest exporter, could lift global prices and allow rivals Brazil and Thailand to increase their shipments, the report said.

"The crop was just looking like last year, but when we started harvesting, we realised that yields were very low," said Pradip Jagtap, a farmer from the Solapur district of the western state of Maharashtra, India's No. 1 sugar-producing state.

Just like Jagtap, the other 192 farmers from 11 key cane-producing districts of Maharashtra told Reuters that prolonged dry weather conditions during summer and then heavy rains later hit the cane crop.

On average, farmers reported a 15% drop in cane yield, but in some pockets, they said the per hectare loss would be 35%.

Maharashtra, which accounts for more than a third of the country's sugar output, was expected to produce a record 13.8 million tonnes of sugar in the current marketing year that began on Oct. 1, up from the last year's 13.7 million tonnes, according to the state government.

But a 15% drop in cane yields could bring down Maharashtra's sugar production to 11.7 million tonnes, said a senior official of a sugar mill and a dealer with a trade house. Both declined to be named as they are not authorised to talk to the media, the report said. 

Along with Maharashtra, cane growers from neighbouring Karnataka state also faced unfavourable weather conditions. As a result, Karnataka's sugar output looks likely to fall to 5.5 million tonnes this year against 6 million tonnes produced in 2021-22, said the mill official.

Lower sugar production in Maharashtra and Karnataka could drag down India's sugar output to 33.3 million tonnes in the current 2022-23 year against last year's record 35.8 million tonnes, the millers said in a previously unreported estimate.

New Delhi has allowed mills to export 6.15 million tonnes of sugar in the first tranche, and producer body the Indian Sugar Mills Association expects India to earmark up to 4 million tonnes of sugar for overseas shipments in the second tranche.

A drop in production could lead to the government approving a small portion of exports in the second tranche or possibly no exports at all, a Mumbai-based dealer with a global trading house who didn't wish to be named in line with his company's policy told Reuters.

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