What went wrong in Indian sugar production estimates of season 2021-22?

Indian sugar production at the start of the season was estimated by the majority of the analysts to be in the range of 30-30.5 MMT. The production dip was considered from the 2020/2021 season expecting higher diversion of sucrose towards Ethanol production, not a wrong assumption.

But when the production numbers started to come in, the World got it wrong. Some of the analysts who did not believe in the first case that production will make a low of 30.5 MMT and were sitting comfortably at 32.7 MMT, a huge gap from the BULLISH lot also got it wrong in the end.

The cane crushing numbers continued to increase and widen its gap from last year crush numbers. The sucrose content reported much better even with higher expected diversion towards Ethanol for 21/22 season and production numbers kept moving higher with every passing fortnight.

In talks with ChiniMandi News, Mr. Harshveer Soni – Founder, GreenLeaf Corporations (GLC) a prominent research house in Indian agri-commodities shared views on what went wrong in Indian sugar production estimates of season 2021-2022. He said, “The area has been completely underestimated by the State departments, associations, analysts, trades and even the millers who crush cane and are in touch with the farmers on a day to day basis. No one had a clue as to how much area has been sown in the ground for cane and how much potential the current crop has that it will prove the world trade fraternity wrong.”

Sharing views on what led to such major increase in area under cane Mr. Harshveer said, “Some of the primitive reason associated with cane are
◾ Cane is a profitable crop: Cane prices have always been lucrative, and the stick has paid more than any other crop year after year and this season it was no different.
◾ Lazy and Sturdy crop: The crop is preferred for it grows on its own unlike other crops which need regular attention and more care
◾ Ready market in the form of mills available with the farmers thus assured Buyer for the produce

But recently, there has been some additional factors leading to increased acreage under cane
◾Cane payment has improved in the recent times with the introduction of Ethanol, especially after allowing sucrose diversion for making ethanol through BHM and cane juice, helping millers with better cash flows, thus on time payment to the farmers.
◾WATER AVAILABILITY has been one major reason for the crop sowing as the regions where cane has come has been the regions where water has been a challenge.
◾Majority of the cane has come in SWING regions which causes fluctuations in cane production as sowing depends on water availability.
◾ Alternate crops like cotton have been impacted in the past in East Maharashtra with pest attack and incessant rains, leading to some of the shift due to crop loss
◾ Augmentation of crush capacity in the state has also been one of the reasons for higher crush and in turn higher sugar production.
◾ With BHM giving better returns to the millers, in turn improving their cash flow and cane payment potential, the millers have increased the capacity to produce more BHM and take advantage of profitability from Ethanol.
▪ Increased capacity has created the demand pull for cane in the region and we might see a much higher drawl of cane in the regions of Maharashtra and Karnataka this season.”

Sharing insights based on the research carried out at GLC, Mr. Soni shared that in the State of Maharashtra Area of 1.26 MMT, avg yield of 95 Mt/Ha and drawl rate of 92%, total sugar production comes out to be 11.5 MMT with Sugar recovery @ 10.43 (current recovery)But the estimates currently are as high as 13.5 MMT for the state.

Doing a bit of back calculation, with all numbers of sugar recovery, drawl %, yield, same as above, the state shall need an area of 1.48 MN ha to produce 13.5 MMT of sugar. Thus, 219 K Ha of area has been left unaccounted for in the current season Expecting higher drawl rate of 95% and higher cane yield @ 100 Mt/ha with better cane and more share of Adsali plantation, still the region will need 1.36 Mn ha of area to produce 13.5 MMT of sugar. Thus, 100 KMT area to be left unaccounted for on a pessimistic basis.

“In conclusion, area in the state has been unaccounted for in the range of 100-219 K Ha.
Similarly looking at the State of Karnataka he said, “The story is no different for Karnataka too.With cane area of 550 K ha, yield of 86 MT/ha, drawl @ 90% and sucrose recovery of 9.77, the sugar production would have been 4.2 MMT for the current season. Doing some back calcs with same parameters as above and expected sugar production of 6.1 MMT, the area under cane should be 807 K Ha. Assuming better yields to 94 and higher drawl @ 95%, we still need an area of 700K Ha to reach to 6.1 MMT of sugar production estimate.” Soni said.

In conclusion, the area between Maharashtra and Karnataka has been largely underestimated and the swing in the area is in the range of 250-450 K Ha. The story on the area will get clear only when the crop concludes, and we have the final numbers of yields and cane crushed for the regions. Till then we continue to see sugar production numbers changing on a daily basis with no real clue as to where it shall end for the basic input required to estimate the cane availability is wrong. It’s like GIGO, Garbage in Garbage out in terms of computer language and that’s what we all have been reaping since the start of the current season.” He further added.

Interestingly, what path does it pave for the next crop will be more interesting.In for a surprise again!!! SURPRISES, something which the Indian sugar industry is never short of.


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