4 The year-wise swings: Since 2000-01 PeriodNo. of seasonsRange(mn tons)Swing from previous high/lowSwing %00-01 to 02-03318.5 to 20.103-04 to 04-05213.5 to 12.7(-) 6.6(-)33%05-06 to 07-0819.3 to 28.4(+) 6.6(+)52%08-09 to 09-1014.5 to 18.9(-) 11.9(-)42%10-11 to 12-1324.0 to 26.2(+) 5.5(+)29%
7 Therefore, The Cycle is ………… Indian sugar production follows a 5 year cycle2 to 3 year of high production; followed by2 to 3 years of low production; and vice versa ….Consumption growth is linearResults in huge swings in the sugar equation
8 Outline of Presentation The Indian Sugar CycleFactors impacting the CycleDo we see an end to the Cycle?Can the Cycle be better Managed?and seasons
9 Sugar production dependant on ….. Cane productionArea under sugarcaneWeather & RainfallCane drawal by sugar industryPrice of cane offered by sugar industryDiversion into gur, khandsari etc.Government policies
10 Fluctuations in cane area and production Price for cane and Arrears of farmersReturns from alternative crops like wheat, paddy, cotton, turmeric etc.
12 Cane Price Arrears (as on 30th June in Rs. crore)
13 The Indian Sugar Cycle Decline in sugar prices Lower Profitability/ lossesHigh Cane price arrearsDecline in area under caneLower sugarcane productionLower Sugar ProductionHigh sugar pricesImproved ProfitabilityGood, timely cane price paymentsHigh Sugarcane ProductionHigh Sugar Production
14 Although 93% of India’s cane crop is irrigated, performance of the 4 month (Jun-Sept) monsoon season has a significant impact on crop outputThis affects yield as well as sucrose formation impacting sugar recovery
18 Policy Contribution to the Cyclicality Regulated Release MechanismControl on sugar prices & Blockage of working capitalLevy Sugar Obligation on millsCarry forward of levy sugar, blockage of capitalExport-Import of SugarTiming and quantity permissionsCane PriceUnreasonably high and no linkage with sugar price
19 Cane Price Arrears vis-à-vis Sugar Inventory Cane price arrears directly related to sugar inventory which industry forced to carryIndustry has no control on cash flow which are need to pay cane price to farmers during crushing season.
20 Outline of Presentation The Indian Sugar CycleFactors impacting the CycleDo we see an end to the Cycle?Can the Cycle be better Managed?and seasons
23 Policy front ……. Permissions in last 2 years for exporting the surplus Timing and QuantitiesMarket for Indian sugarCash Flow needs better metQuarterly release mechanismLevy sugar: Conversions and ‘Carry forward’ ruleSugar price vis-à-vis cost of productionGovernment and public awareness and acceptance
25 Cane Price ArrearsHigh Cane Price Arrears are usually followed by fall in Cane Acreage and fall in sugar productionIt is not expected to happen in
26 Diversion of cane and area Price of competing cropsReturns to farmers from wheat, paddy, cotton, turmeric etc.Cane drawal for gur, jaggery, khandsari etc.Price offered by alternate sweetener manufacturers
27 Outline of Presentation The Indian Sugar CycleFactors impacting the CycleDo we see an end to the Cycle?Can the Cycle be better Managed?and seasons
28 Management of the Surplus: suggestions Freedom from Government controlsCane price – sugar price linkageFreer trade policyDiversion of surplus cane into ethanolDiversion to alternate sweeteners
29 Outline of Presentation The Indian Sugar CycleFactors impacting the CycleDo we see an end to the Cycle?Can the Cycle be better Managed?and seasons
31 2012-13 and 2013-14: Will the Cycle come back? :Very good cane price inCane area higher by 4% over previous 2 seasonsDoubts regarding rainfall in Maharashtra and KarnatakaRains have picked up in last 2 weeksHighest ever cane area in Uttar PradeshEstimated sugar production of 24.0 million tons
32 2012-13 and 2013-14: Will the Cycle come back? Price for competing crops vis-a-vis cane priceCane price arrears in ?Sugar prices covering cost of productionSurplus sugar in not as large as in previous yearsWith some late rainfall and the outcome of retreating monsoon, reservoirs in Maharashtra and Karnataka may have more water18 month crop in Maharashtra showing signs of picking upHowever, still very early to estimate, but indications as of now do not indicate a swing in cane area or fall in sugar production
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