Sugar presentation by anuj agarwal

“ INDIAN SUGAR INDUSTRY DYNAMICS WITH SPECIFIC FOCUS ON MAHARASHTRA”

Project Mentor:

Mr. Anil Kishore

(Senior Fundamental Analyst)

Transgraph, Hyderabad

Submitted By:

Anuj Agarwal (R590209006)M.B.A. Energy Trading UPES, Dehradun

Introduction

Sugar is the oldest commodity in the world. Mainly it is manufacture from sugarcane but in some countries it is manufacture from sugar beet.

India is presently a dominant player in the global sugar industry along with Brazil in term of production. The government had a controlling grip over the industry, which has slowly yet steadily given way to liberalization.

Apr 10, 2023 Indian Sugar Industry Dynamics with specific focus on Maharashtra

Sugar Production Process


Types of Sugar

Granulated - It is pure crystalline sucrose mostly used by food processors and professional bakers. It is of seven types Regular sugar, Fruit sugar, Bakers special, Superfine sugar, Powered sugar, Coarse sugar and Sanding sugar.

Brown sugar - It is used in home and food industry to develop the rich molasses type flavor in cookies, candies and similar products.

Liquid sugar - Liquid sugar is essentially liquid granulated sugar and can be used in products wherever dissolved granulated sugar might be used.

Invert sugar - Available commercially only in liquid form, invert sugar is sweeter than granulated sugar. It is used in carbonated beverage industry and in food products to retard crystallization of sugar and retain moisture.


Products from Sugarcane


Sugar Production Cycle


Production Basics

Area & Distribution Climatic Requirements Soil Seed Selection Seed Preparation Time of Planting Manures and Fertilizers Water Management Diseases Harvesting YieldApr 10, 2023 Indian Sugar Industry Dynamics with specific focus on Maharashtra

Global Sugar Supply Demand Dynamics

Sugar is produced in 115 countries. Sugar is extracted from two different raw materials sugarcane sugar beet

Sugarcane is cultivated under tropical climates, while sugar beet is grown in temperate regions. Around 75% of the sugar produced in the world is from sugarcane, with beet sugar accounting for the rest.


World Sugar ProductionCountry 04-05 05-06 06-07 07-08 08-09 09-10 10-11(E)

Australia 5,388 5,297 5,212 4,939 4,814 4,700 4,980

Argentina 1,815 2,140 2,440 2,190 2,420 2,230 2,260

Brazil 28,175 26,850 31,450 31,600 31,850 36,400 40,700

China 9,171 8,569 11,497 14,636 12,337 10,968 12,950

Colombia 2,713 2,439 2,354 2,245 2,277 2,200 2,200

Cuba 1,350 1,240 1,200 1,420 1,250 1,000 1,100

Egypt 1,050 1,102 1,104 1,027 1,069 1,070 1,075

Guatemala 1,982 2,000 2,365 2,274 2,381 2,415 2,474

India 14,170 21,140 30,780 28,630 15,960 19,460 24,700

Indonesia 2,050 2,100 1,900 2,000 2,053 1,910 1,911

Mexico 6,149 5,604 5,633 5,852 5,260 4,900 5,450

Pakistan 2,922 2,588 3,600 4,143 3,492 3,400 3,750

Philippines 2,150 2,138 2,232 2,455 2,100 2,000 2,200

South Africa 2,315 2,595 2,313 2,360 2,350 2,254 2,250

Thailand 5,187 4,835 6,720 7,820 7,200 6,940 7,150

US 2,963 2,681 3,119 3,113 3,010 3,036 3,207

Vietnam 980 930 1,100 1,220 910 905 1,130

Source: - USDA (http://www.fas.usda.gov/psdonline/psdquery.aspx

(1000 MT)


Global Sugarcane Harvesting Season

Country Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Brazil

India

Thailand

Mexico

China

EU


World Trade Scenario

Attribute 04-05 05-06 06-07 07-08 08-09 09-10 10-11(E)

Total Imports 45,418 44,757 43,504 45,377 48,169 51,298 47,981

Total Exports 46,930 49,864 51,439 51,535 48,860 50,518 53,639

(1000 MT)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)0

10,000

20,000

30,000

40,000

50,000

60,000

Total Imports (1000 MT)

Total Exports (1000 MT)

Source: - USDA (http://www.fas.usda.gov/psdonline/psdquery.aspx)


Top 10 Importer EU Indonesia Russia UAE US Korea Nigeria Malaysia Japan China

Top 10 Exporter Brazil India Thailand Australia UAE Guatemala EU South Africa Colombia Mauritius


World Consumption Trend

Attribute 04-05 05-06 06-07 07-08 08-09 09-10 10-11(E)

Human Dom. Consumption 142,396 141,824 150,411 151,413 153,504 153,265 156,852

(1000 MT)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)

142,396 141,824

150,411151,413

153,504 153,265

156,852

Human Dom. Consumption (1000 MT)

Human Dom. Consumption (1000 MT)



Indian Sugar Supply Demand Dynamics

The demand for sugar is mainly depend on

1. Population growth

2. Income level

Being a basis commodity, the demand for sugar increase with an increase in population. The increase in per capita income increases the demand for sugar.


Sugar Production Trend

State wise Sugar Production in India

States 2005-06 2006-07 2007-08 2008-09

Andhra Pradesh 1236 1680 1335 593

Gujarat 1168 1425 1366 1012

Karnataka 1943 2662 2900 1654

M.P. 94 180 174 56

Maharashtra 5197 9100 9075 4578

Punjab 338 486 534 242

Tamil Nadu & Pondy 2170 2599 2192 1615

U.P. central 1778 2908 2473 1373

U.P. East 2093 2823 2414 1291

U.P. West 1913 2744 2432 1400

(1000 MT)


Sugar Recovery Trend

Some of the key factors that influence sugar recovery rates stand to be

1. The weather and climatic conditions during crop growth

2. Agronomic practices adopted

3. Pest and disease infestation

4. Varieties under cultivation


Cane Diversion Tendencies

Cane diversion is mainly depending on the prices of sugar in the market. It has direct relationship with the prices of sugar. If the price of sugar goes up then cane diversion to other products like Gur and Khandsari is more and vice- versa.


Sugar Harvesting PeriodStates Harvesting Seasons

Andhra Pradesh Dec-April

Assam Nov-Jan.

Bihar Nov-Mar.

Gujarat Dec-Mar.

Haryana Dec-Mar.

Himachal Pradesh Oct-Dec.

Jammu & Kashmir Oct-Dec.

Karnataka Nov-Mar.

Kerala Oct-Dec.

Madhya Pradesh Oct-Mar.

Maharashtra Oct-Feb.

Orissa Nov-Feb.

Punjab Dec-Mar.

Rajasthan Nov-Feb.

Tamil Nadu Dec-Aug.

Uttar Pradesh Oct-June

West Bengal Dec-Mar.

India Oct-April


Indian Trade Scenario

Attribute 04-05 05-06 06-07 07-08 08-09 09-10 10-11(E)

Total Imports 2,135 50 0 0 2,786 4,500 1,200

Total Exports 40 1,510 2,680 5,830 176 5 20

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-

11(E)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Total Imports Total Exports

(1000 MT)


Sugar Consumption Trend

Attribute 04-05 05-06 06-07 07-08 08-09 09-10 10-11(E)

Human Dom. Consumption 20,385 19,870 22,425 23,500 24,200 23,500 24,500

(1000 MT)

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11(E)

20,385 19,87022,425 23,500 24,200 23,500 24,500

Human Dom. Consumption



Market Analysis

1. In Maharashtra, there is a tender system for the brokers to buy sugar from mills. However in Uttar Pradesh, Tamil Nadu and Gujarat no bidding take place but daily auction happens depending on daily quotes. Mills have their own agents who make transaction on behalf of the mills. These agents get incentives by the millers to the extent of Rs 2 per quintal.

2. Once bidding is over material should be lifted within 10-15 days against the payment made through DD in advance. Whereas in private mills, the lifting period for bid sugar is 2-3 days.


Maharashtra Sugar Industry Structure

In Maharashtra there are around 160-185 (anticipated for forthcoming season) active mills. Out of which 39 are in Kolhapur.

Maharashtra Sugar Industry

Co-operative (95%) Private (5%)


Maharashtra Sugarcane Diversion

Sugarcane

Gur (10-15%)

Khandsari (5%)

Sugar (80-85%)


Transportation cost

Sugar takeoff from Kolhapur is 50 trucks of 10 ton each from 50 traders which means 5000 ton of sugar everyday which is equal to 35% of total Maharashtra trade. Transportation cost from Kolhapur to Vashi is around Rs 75 per ton, excise duty is Rs. 97.85 per qtl and Octroi is 4%. Packing cost of polythene bag for bulk consumers is Rs 35 per qtl where as for retail customers it cost Rs 50 per qtl for jute bag.

Origin Destination Amount

Kolhapur Gujarat Rs 130/qtl

Kolhapur Mumbai Rs 60-70/qtl

Kolhapur Rajasthan Rs 160/qtl


Trade Chain Analysis


Gur MarketIn India 15% of sugarcane goes for Gur production and remaining goes for sugar and other purposes. In Maharashtra 10% of sugar cane goes for Gur production and remaining goes to sugar.

The cost of production of making Gur is less than making sugar because it requires less man power and can be made in small setup.

Out of the total Gur produced 1-2% goes for industrial purpose and 98-99% goes for domestic consumption.

Gujarat is the major consumer of sugar and Gur. Out of total Gur produced in Maharashtra from Kolhapur, 75% goes to Gujarat and remaining 25% goes to other states like Karnataka, Madhya Pradesh, Mumbai, etc.


Gur Trade Chain

Name Paid by Paid to Amount

Weighing charges Farmer Market committee Rs 0.4 per 10 kg

Commission Farmer Commission agent 3%

Commission Trader Market committee Rs 1.05 per Rs 100

Commission Buyer Trader 2%

Packing charges Wholesaler/Retailer Trader Rs 10 per 10 kg


Sugar Value Chain


Competing crops

Crops Duration Start from

Cotton 6 month May

Wheat 4 month October

Rice 5 month June

Urad dal 3 month July

Onion 4 month August


ConclusionIndian Sugar industry is regulated by government. As sugar is our political crop therefore it is very price sensitive. The demand and supply is depending upon the variation in the prices which was fixed by government. According to the estimation of the Indian government, it is said that this year the production of sugarcane will go up to 25-27 million ton. Because in major states like Maharashtra, Uttar Pradesh, Tamil Nadu, Karnataka, etc. acreage increment is around 20% which results in higher production. In Maharashtra recovery rate is more than any other states i.e. 12%. In Maharashtra and U.P. monsoon come late in this year but in huge quantity which makes recovery rate higher than previous year. The huge supply of sugarcane creates more production of sugar which results in lower prices. As market has knowledge that there is an estimation of bumper crop in the coming 2-3 months the consumption is at its slow rate because everyone is waiting for the new production so that they got sugar on low price than before.


Sugar presentation by anuj agarwal

Documents

Transcript of Sugar presentation by anuj agarwal