After bumper production and slumping prices brought miseries for the sugar cane farmers in India, it is the turn of Thailand, which will give stiff competition this year to Indian exporters in global market.
After the export options shrank following good output across the world, the Asian giants in sugar production - India and Thailand - are expected to compete with each other for the global export market even though the prices are falling in the world market.
Thailand is expected to produce 6.5 million tonnes of sugar in the crop year to September 2007, up 1.8 million tonnes over a year ago, while India is eyeing 23-24 million tonnes this year against 19.4 million tonnes last year.
Indonesia, one of the main importers, has already bought 1.6 lakh tonnes of white sugar out of its total import quota of 200,000 tonnes. Pakistan, a major buyer of Indian sugar, has no plans to import this year as production and carryover stocks outstripping demand there.
According to officials in the Consumer Affairs Ministry, sitting on a huge surplus and faced with softening domestic prices, Indian sugar mills would try to export more. Officials said India has approved sugar exports totaling 400,000 tones.
Earlier, prices in India were higher than global prices. Now, international prices are around $330 a tonne and Indian prices are at almost the same level. Traders said Indian prices could fall further, making exports attractive for mills.
Thailand is vying to export more this year, especially to the Middle East and some east African countries, which traditionally bought sugar from the European Union, traders said.]
After the EU cut its subsidy to comply with the WTO agreement, Thailand has an opportunity to sell more, especially in the Middle East. Thailand has fixed the quota for domestic consumption at 2 million tonnes, a little lower than the 2.1 million tonnes last year, leaving 4.5 million tonnes for export.
There were also some carryover stocks, resulting in an exportable surplus of 5 million tones.
Officials said Pakistan had sufficient stocks to meet domestic demand and production was likely to peak. Production has picked up and all the mills are now running to full capacity.
Pakistan's 78 sugar mills are expected to produce up to 3.6 million tones this year against 2.6 million last year. Pakistan consumes about 3.9 million tonnes of sugar annually.