Insight Focus
- India is currently one of the world’s largest sugar exporters.
- But there’s little room for sucrose production to grow.
- As more sucrose is diverted to ethanol, Indian sugar export flows could decline.
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Can the World Market Continue to Rely on India for Sugar?
India regularly produces more sugar than it needs.
However, production has little room to grow due to a lack of spare arable land and water. Cane is one of India’s more water-intensive crops so must be grown in areas with good availability. But India’s water availability on a per capita basis is declining and some of the country’s dominant cane districts are facing acute water stress.
Drought impacts cane yields and makes it tricky for farmers to plant new cane in dry ground. The 2019/20 drought showed how difficult the situation can be in Maharashtra and Karnataka.
Beyond this, if acreage is to expand, cane must take land from other crops. This will be difficult as cane farmers have already maximised their plantings to capitalise on strong prices.
The government is also pushing to reduce the country’s sucrose surplus by encouraging mills to divert cane towards ethanol production by introducing ambitious goals for ethanol blending: E20 by 2025.
This means yields must improve if sugar production is to increase in the future. Agricultural yields can be raised by measures such as precision irrigation, mechanisation, soil mapping and variety development. We talk more about the plausibility of this here.
This all means that other world market suppliers with the ability to increase production and world market exports (such as Brazil, Thailand, Pakistan & Mexico) could become more important in the coming years.
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