MUMBAI - India's sugar output could fall 20% to the lowest level in three years in 2019/20 after drought last year forced farmers to curb cane planting and as floods this year damaged crops in key growing areas, a senior industry official said on Thursday.
Lower production could help the world's biggest sugar producer to reduce stockpiles that have been boosted by two years of record output and lower-than-expected exports.
India's sugar output could fall to 26.3 million tonnes in the marketing year starting from Oct. 1, down from 33 million tonnes a year ago, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd.
"Last month's floods badly affected cane plantation in Maharashtra and Karnataka."
The western state of Maharashtra is the country's second-biggest sugar producer, while the southern state of Karnataka ranks third.
Maharashtra's sugar production could nearly halve from a year ago to 5.5 million tonnes in 2019/20, while Karnataka's output may drop 23% to 3.3 million tonnes, Naiknavare said.
In the first week of August, many districts in the two states received as much as 670 mm rainfall, flooding rivers and submerging cane planted near the banks of rivers.
"My cane plantation on four acres was completely damaged as it was underwater for a fortnight," said farmer Raghunath Pawar from Sangli district of Maharashtra state.
In July, another trade body, Indian Sugar Mills Association, had forecast production of 28.2 million tonnes in 2019/20.
Cane planting was hit by dry spell at the beginning of the monsoon season in June and then because of excessive rainfall in August, said B.B. Thombare, president of the Western India Sugar Mills Association (WISMA).
Years of bumper cane harvests and record sugar production have hammered domestic sugar prices, making it hard for mills to pay money owed to farmers, who form an influential voting bloc.
To bring down cane arrears and reduce rising inventories, New Delhi has provided incentives to mills for overseas sugar sales and set an export target of 6 million tonnes for 2019/20.
The government assistance will help in clinching export deals and bringing down stocks, Thombare said.
India is likely to start 2019/20 marketing year with record carry forward stocks of 14.2 million tonnes, the government said last month.