Global Sugar Prices Rise... Concerns Over Soaring Grocery Costs
As the world's largest sugar producer India is expected to ban sugar exports starting in October, concerns are rising that food prices will skyrocket.
According to major foreign media on the 23rd (local time), the Indian government is preparing export ban measures as sugarcane harvests have significantly decreased due to drought. Last May, India imposed restrictions on sugar exports, but this time it has taken the step to completely 'halt exports.'
Currently, global sugar prices are soaring to unprecedented levels. This is due to forecasts that production will decline because of heavy rains and drought hitting India. Additionally, the Indian government's efforts to produce ethanol from sugarcane have further reduced sugar production.
In the western state of Maharashtra, which accounts for about one-third of India's total sugarcane production, production has sharply declined since last year due to heavy rains. After the heavy rains, drought caused rainfall during the monsoon season to drop by nearly 50% compared to average years, directly impacting the region due to climate change.
Earlier this year, global sugar prices reached their highest level in six years, and recently sugar futures prices surged 20% compared to the beginning of the year. Local sugar prices in India have also reached their highest level in two years, driving up consumer prices. India's food inflation rate in July recorded 11.5%.
The Indian government planned to produce a total of 32.8 million tons of sugar from October 2022 to September 2023, with 6.1 million tons designated for export. In addition, last May, the annual export quota was reduced from 10 million tons to 8 million tons.
However, from October this year to September next year, total production is expected to decrease to 31.7 million tons. If India halts sugar exports with this measure, international sugar prices are predicted to soar again to record highs, further fueling the rise in food prices.
Moreover, Indian Prime Minister Narendra Modi is promoting a biofuel program that produces ethanol using sugarcane. The Indian government plans to convert 50 million tons of sugar into ethanol this year and use 60 million tons annually for biofuel production by 2025.
A source from the Indian government stated, “There will not be enough sugar allocated for export in the next sugarcane season. Our main focus is to satisfy domestic sugar demand and produce ethanol from the surplus sugarcane.”
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