New Delhi, Jan. 16 - India's sugar production in the crop year that started October is likely to fall to 26 million metric tons from around 28 million a year earlier, because of low yields in some provinces, Farm Minister Sharad Pawar said Wednesday.
"There is a possibility that overall sugar production in the country might fall to 26 million metric tons because of low yields as farmers didn't care much about their standing crop," Pawar told reporters.
This is the first time that the country's farm minister has accepted that sugar production in the current year could fall due to low yields.
Earlier, most industry players and the government was expecting India's sugar production to be at least 30 million tons, 2 million tons more than last year.
Sugar prices in most Indian markets have risen sharply over the last few weeks over talk of a likely fall in production.
"Last year prices were very low, hence most farmers have not taken care of their crop which is affecting the yields this time," Pawar said.
However, officials said that though production is expected to be lower on the year, it won't affect supply as the large carryover stocks from last year will be sufficient to meet any additional demand.
"We already have carried over more than 11 million tons of sugar from last year, including the 5.0 million tons of buffer kept with the mills, so even if local demand rises to 21 million tons in 2007-08, we will still have a surplus," a senior government official said.
He also said the surplus sugar will be adequate to meet the country's export needs.
India's federal government had announced a slew of incentives for sugar mills to aid exports as a sharp drop in global sugar prices because of a supply glut badly affected exports.
India expects sugar exports in 2007-08 to rise to around 3.0 million tons, from 1.8 million a year earlier.
On wheat, Pawar said that the federal government is pretty confident that production in the marketing year that starts in April might exceed 75 million tons.
"As of Wednesday, the situation looks quite comfortable, but the final production figure will depend on the weather conditions over the next few months," Pawar said.
Earlier, the Farm Secretary P.K. Mishra said wheat production is on course to reach the target of more than 75 million tons.
"The weather in December was excellent for the wheat crop and the mild rains in northern India in the past week have greatly aided grains, which should augur well for final output," Mishra said.
In 2006-07, India produced around 74.89 million tons of wheat.
Pawar also said the country's wheat stock position was comfortable.
According to government data, wheat stocks in state-run granaries on Jan. 1 stood at 7.7 million metric tons, up from around 6.7 million a year earlier.
Most government officials admit wheat stocks on April 1 should be more than 5.0 million tons, well above the federal government's buffer stocks requirement of 4.0 million tons.
A comfortable wheat stock position will ensure that India's has to rely less on imports to meet its buffer requirement and also to run its subsidized food programs.
In 2007, India's wheat imports fell by over two thirds mainly due to a larger domestic crop and a global shortage.
Officials said the government and private traders entered into contract to import around 1.83 million metric tons of wheat in 2007, down from 6.5 million tons a year earlier.