June 12, 2023
Business Today | https://www.businesstoday.in/latest/economy/story/el-nino-impact-centre-...
The Centre is mulling a cap on sugar exports till at least the first half of 2024 as the government is apprehensive about the impact of El Nino weather conditions. The government is worried that El Nino could reduce rainfall and impact agricultural production.
"The weather is a big negative factor. Last year, despite good monsoon rains, sugar production fell. This year, with El Nino, we can't take the risk of allowing exports early," said a senior government official on the condition of anonymity, as per a report in Reuters. The El Nino weather pattern could usher in extreme weather conditions later this year.
Another government official stated that it takes at least a few months to get a clear idea about production in any sugar season. Thus, the government is adopting a wait-and-watch approach, the official explained. One of the officials noted: "As far as exports are concerned, we will not be in any hurry at all."
The sugar industry scaled down this year’s output to 32 million tonnes from the 36 million tonnes at the start of this year’s sugar season.
Officials stated even if the Central government agreed to allow sugar exports later during the 2023-24 season, New Delhi may not allow more than 4 million tonnes. They explained that the government is eyeing a reduction in food prices ahead of state elections in 2023 and the General Elections in mid-2024.
A Mumbai-based dealer told the news agency that the Indian sugar exports are critical for the global market since global prices are trading near 11-years high. The dealer said delay in exports from India could further hike prices and would allow Brazilian sellers to demand even higher prices.
El Nino refers to a weather phenomenon that occurs when ocean temperatures go up above normal in the central and eastern Pacific Ocean regions. This leads to changes in atmospheric patterns, cause a weakening of the monsoon circulation over the Indian subcontinent. Thus, monsoon in India tends to be weaker and erratic during the El Nino years.
Monsoon is important for India, providing about 70% of annual rain and impacting key crops such as rice, wheat, sugarcane, soybeans, and peanuts. Agriculture contributes about 19% to India’s $3 trillion economy and employs more than half of the 1.4 billion population.