Sugar data in a cloud amid factory-farmers tussle

NEW DELHI: Sugar output estimates, which have a direct bearing on prices and government policy, have been caught in a thicket of controversy with a key industry body penciling consumption for 2009-10 at the lowest in recent years and farmer groups countering the claim.

An upshot of the Indian Sugar Mills Association’s estimate of 21.4 million tonne would be that the carryover stocks of the commodity for the season starting October would be the highest in recent times at nearly 6 million tonne, including imports of 5.3 mt.

Swelling stocks complemented by robust production push the case for imposing import duty on white sugar. Likewise, the case for freeing the industry from prices fixed by the government also gains momentum.
ISMA’s estimates are also at odds with the government’s assessment. The food ministry had recently projected carryover stocks at less than 2mt.

Farmers groups have charged the industry of manipulating data on sugarcane acreage and sugar production to prop up market sentiment, an allegation that ISMA officials have denied.

As big sugar states such as Uttar Pradesh are yet to release their acreage data, it is premature to predict the coming year’s sugar output, he said.

ISMA officials said the low consumption could be because bulk consumers relied on imports for most of the year. They pointed fingers at the government’s statistics, saying it was using flawed sugarcane acreage data that projected a rise of 15% in 2009-10 from a year ago, leading to incorrect output estimates for 2009-10.

The flawed data, they said, could also be making the government’s sugar output calculations for 2010-11 wide off the mark.

The cane to be crushed in a sugar season is planted in the previous year, making it crucial to have accurate estimates of crop coverage in order to assess the coming year’s output. A minor error in projections could impact consumer prices directly.

ISMA contends the increase in acreage was 18-20%. “The data needs to be revised at the earliest,” said ISMA deputy director general MN Rao.

By that reckoning, the area under sugarcane cultivation for 2010-11 could be 54 lakh hectare against 47.3 lakh hectare estimated by the government.

The ISMA figure opens the possibility of sugarcane output rising by 6.3 million tonne to around 25 million tonne, surpassing the government’s projection of 23 million tonne in 2010-11.