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 Millers have not paid up for his cane this year as falling sugar
prices have hit their income. But switching crops is not an option
as prices for most agricultural produce have dropped and forecasts
for weak monsoons have raised worries on yields.
With farmers like Patil staying put on cane fields, India is seen
producing excess sugar in 2015/16. A sixth annual surplus, the
longest such stretch ever, will allow the world's No.2 sugar
producer after Brazil to remain a net exporter, denting global
prices that hit six-year lows in March on ample supplies.
In the past, lower prices have prompted Indian cane growers to
switch to other crops, but given uncertainties about the monsoons
this year, farmers see more sense in staying with resilient cane
than moving to delicate crops.
"In changing weather conditions, sugar cane is more reliable than
others. You may get lower returns, but at least something is
assured," said the farmer Patil from India's top sugar producing
Maharashtra state, who is still owed nearly 50,000 Indian rupees
($788.27) by a mill for cane sold this year.
"In other crops you may not get anything if weather becomes
erratic," said Patil, whose onion crop on two acres was damaged this
year by unseasonal rainfall in February.
Vivek Shinde, another Indian cane farmer, agreed.
"Cane prices can't fall below a certain level, but that is not the
case with vegetables. They can rise to 100 rupees per kg or fall to
5 rupees," said Shinde, from Ahmednagar district, 250 km east of
Mumbai.
Shinde should ideally get 2,500 rupees per tonne for cane as per the
price fixed by the central government, but millers have been paying
him 40 percent less.
TAKING HEART FROM GOVERNMENT MEASURES
Cane farmers in India are, however, taking heart from recent
government measures, such as a subsidy for raw sugar exports and
higher import duties, aimed at helping the country's beleaguered
mills as well as its farmers.
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Due to plunging domestic sugar prices, down 16 percent over the past
seven months, mills' financial health has been eroded to the extent
that they now owe more than $3 billion to cane growers for purchases
made since Oct. 1, 2014.
"The government measures are providing farmers hope that their
income will improve going ahead," said Pallavi Munankar, commodity
analyst at Geofin Comtrade.
Also, given the low cost of taking a second harvest from the stubs
of cane roots, known as ratoon, means farmers will stay with it,
Munankar added. Indian farmers usually take one ratoon crop as after
that yields begin to drop.
India's sugar output in 2015/16 could reach 25.7-26 million tonnes,
versus its demand for around 25 million tonnes, said Rahil Shaikh,
managing director of commodities trader ED&F Man Commodities India.
That would account for 15 percent of total global sugar output,
almost unchanged from this year.
With its recent surplus, India is set to start the sugar marketing
year in October with carry forward stocks of 9.5 million tonnes, the
Indian Sugar Mills Association said.
(Editing by Himani Sarkar)
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