SUGAR

Sugar (sucrose) is a carbohydrate that occurs naturally in every fruit and vegetable. It is the major product of photosynthesis, the process by which plants transform the sun's energy into food. Sugar occurs in greatest quantities in sugar cane and sugar beets from which it is separated for commercial use.

For sugar cane, this is accomplished by a) pressing the cane to extract the juice; b) boiling the juice until it begins to thicken and sugar begins to crystallize; c) spinning the crystals in a centrifuge to remove the syrup, producing raw sugar; d) shipping the raw sugar to a refinery where it is washed and filtered to remove remaining non-sugar ingredients and color; and e) crystallizing, drying and packaging the refined sugar.

Beet sugar processing is similar, but it is done in one continuous process without the raw sugar stage. The sugar beets are washed, sliced and soaked in hot water to separate the sugar-containing juice from the beet fiber. The sugar-laden juice is purified, filtered, concentrated and dried in a series of steps similar to cane sugar processing.

WORLD TRADE SCENE

For sugar year 2002-03 ending September 2003, world sugar production is over 6 million tonnes in excess of global consumption. World production of sugar is now estimated at 147.90 million tonnes (raw value) signifying an increase of 4.5 million tonnes over previous year. On the other hand, world sugar consumption is expected to grow 2.7 percent from the previous year's level. The import demand however is likely to fall by 1.3 million tonnes. World sugar production in 2003-04 is estimated at 145.4 million tonnes (raw value) against 140.4 million tonnes in 2002-03. World consumption of sugar is estimated marginally higher at 143 million tonnes in 2003-04 from 142.80 million tonnes in the previous year. World sugar surplus, however, is marginally higher at 2.35 million tonnes compared with 2.40 million tonnes in 2002-03.

The aggregate production in five principal exporter countries in 2003-04 is estimated to stand at 57.51 million tonnes which is expected to increase to 62.10 million tonnes in 2004-05. These countries include EU, Brazil, Australia, Thailand and South Africa.

Global exports of sugar in 2003-04 is estimated at 45.25 million tonnes against 46.14 million tonnes in 2002-03. Brazil is likely to emerge as the largest exporter.

INDIAN SCENE

Sugar is India's second largest agro-processing industry. Sugar area accounts for 2.2 percent of country's total cropped area. India's sugar year (SY) is October-September. India's domestic sugar market is estimated at Rs. 250 billion.

There are 450 sugar factories accounting for 57-60 percent of India's total sugar production. Indian sugar industry's total installed capacity (estimated) stands at 16.5 million tonnes per annum while actual production stood at 18.5 million tonnes. Production during 2001-02 is estimated at 17.2 million tonnes.

After Brazil, India is world's second largest sugar producer. The country produced 20.01 million tonnes in SY 2002-03 signifying 1.51 million tonnes increase over previous year's production of 18.51 million tonnes. The 2003-04 production is estimated at around 14 million tonnes or about 6 million tonnes lower than the previous year. The shortfall is attributed to drought situation in Maharashtra, Karnataka and Andhra Pradesh. Production in Maharashtra alone is likely to be 3 million tonnes lower than the last year's production of 6.2 million tonnes.

India's sugar consumption in 2002-03 is estimated at 18.2 million tonnes against 16.5 million tonnes in 2001-02, according to ISMA. Sugar consumption in 2003-04 is estimated at 18.5 million tonnes. The domestic packaged sugar market is estimated at 40,000 tonne.

According to USDA's provisional estimate, India's sugar stocks at the end of 2001-02 stood at 12.11 million tonnes (raw value) which is equivalent to over eight and a half months' domestic consumption. The stock at the end of 2002-03 is estimated to be substantially lower at 10.66 million tonnes. According to India's federal government norm, 'safe' buffer stock is equivalent to three months' domestic consumption.

PEC’S ACTIVITIES

PEC has been active in import as well as export of sugar in past. PEC has imported and exported sugar from all the major ports of India. The import requirement or export surplus is generated depending on the consumption and production of sugar in India

Due to the drought situation and the lesser production of cane sugar, many sugar mills in Western and South Western India have been planning to import raw sugar from Brazil. PEC has associated with some of the Sugar mills in the Western and South Western India to import bulk quantities of raw sugar.

India: Sugar Production, Consumption, Import, Export and Year-end Stocks

(In '000 tonne, raw value basis)

Figures in bracket indicate year-on changes
P: Provisional
Source: USDA
May, 2004

Back