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Introduction to Sugar Industry

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Submitted By harshitaj
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Introduction
The world sugar market is experiencing considerable changes in prices. The global sugar stocks, which had been plunging constantly, experienced its lowest in 2010-11 at 165.68 million tonnes. This was due to the drought conditions occuring throughout the world, leading to lower production. However, high demands for sugar has caused a surge in the market prices. World sugar prices dropped in 2012, due to a “bumper crop” around the globe which lead to the decrease in international sugar prices. [1]In 2012 the global production increased by 6% to 171 mn tn from 162 mn tn when comparison to the last year. Increase in production will be seen in 2012-13 majorly due to the rise in production in Brazil and China. International demand for sugar is anticipated to highten in 2012-13 but at a slow rate.[2]
Brazil is the major producer and exporter of sugar, and is termed as the "global trading nation". Brazil has acquired a position as the "price-setter" in the world sugar market. Recently, the production costs increased in Brazil and in other major export countries like Australia and Thailand, which has resulted in an increase in the value of their currency in comparison to dollars.[3]
In India, sugar production increased by 6.6% in 2011-12 to 26 mn tn from 24.4 mn tn when compared to the previous year. The country's production will surpass the domestic consumption in 2012-13 season that starts in October. Although the production decreased in Maharashtra and Karnataka due to inadequate rainfall in the early monsoon period, the loss that thus occured will be considerably covered up by Uttar Pradesh, whose production is expected to highten to 7.9 mn tn.[4]
India is a net exporter for its surplus productions, imports of 0.4 mn tn were seen in 2011-2012 due to considerable differences in domestic and global prices. Total exports of 3.2 mn tn occured in 2011-12. Recetly, India is going to produce surplus sugar and has decided to make exports, which will possibly be around 3 mn tn, according to ISMA(Indian Sugar Mills Association).[5] Profits of Indian sugar industry will continue to decelerate due to high cane costs, the lack of ability of the companies to pass on the burden to customers due to strict government policies, lower global sugar prices that result in lower exports.[6] Profits of the industry in 2010 and 2011 stood at Rs.-42,941.7 mn and Rs. -15,416.9 mn respectively.[7]
The research on this industry is conducted to see the effect of the various factors on the profitability of the industry. There is a need to study the performance of the sugar industry and how does it get affected by various factors influencing the industry such as cane costs, energy costs, exports, domestic production, etc.
Research Objective
The objective of the study is to analyze the effects of the various factors on the growth and performance of the Indian sugar industry.
Scope of the study
The study conducted might help in the betterment of the performance of the Indian sugar industry. As it focusses on the factors that influence the performance, it may help in bringing out a stability in the profitabilty of the industry which is continuously declining. Better government policies may be formed with respect to the passing on the pressure of the high cane costs to the consumers. Thus, the cane prices may also be revised by the government. An improvement in the objectives of the exim regulations might be seen.

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[ 1 ]. http://www.slideshare.net/SoobianAhmed/indian-sugar-industry-12639578#btnNext
[ 2 ]. http://investmentguruindia.com/researcharticles/Sugar%20Special%20Report%20-%2016th%20October%202012.pdf
[ 3 ]. http://www.slideshare.net/SoobianAhmed/indian-sugar-industry-12639578#btnNext
[ 4 ]. http://investmentguruindia.com/researcharticles/Sugar%20Special%20Report%20-%2016th%20October%202012.pdf
[ 5 ]. http://investmentguruindia.com/researcharticles/Sugar%20Special%20Report%20-%2016th%20October%202012.pdf
[ 6 ]. http://www.business-standard.com/article/markets/high-cane-prices-to-dent-sugar-companies-profitability-112122500055_1.html
[ 7 ]. http://economicoutlook.cmie.com/

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