Arab Countries Brace for Sugar Price Surge as India Suspends Exports Due to Reduced Cane Yields
JEDDAH: Saudi Crown PrincSeptember 1, 2023 : RIYADH/DUBAI/NEW DELHI – Arab nations are preparing for a significant spike in sugar prices as India, a key supplier of agricultural products to the import-dependent Middle East, plans to halt sugar exports from October this year until September next year.
According to information obtained from three sources within the Indian government, reported by Reuters news agency, New Delhi has decided to impose an 11-month ban, marking the first such move in seven years. The primary reason cited for this decision is the diminished cane yields caused by a lack of rainfall during the summer monsoon season.
Pushan Sharma, Director of Research at CRISIL Market Intelligence and Analytics, explained, «This potential ban stems from inadequate rainfall in critical sugarcane cultivating districts.»
Although certain sugarcane-growing regions in states like Uttar Pradesh, Maharashtra, and Karnataka experienced normal rainfall during the summer, Sharma notes that «a few key districts have received lesser rainfall, and the yields are expected to be lower» in the upcoming 2023-24 sugar season. These states alone contribute more than half of India›s total sugar output. The reduction in Indian sugar production and its absence from the global market are expected to lead to price hikes, compounding the challenges faced by a world already grappling with multi-year highs in sugar prices.Renewed concerns now loom over global food market inflation, with particular ramifications for the Arab world, a significant consumer of Indian sugar.
Fadel El-Zubi, a lead consultant for the UN Food and Agriculture Organization in Jordan, expressed his apprehension, stating, «There are some Arab countries that will not be able to absorb the price increase shock, and this will affect its imports, its stock, and the distribution process.» He further cautioned that these countries are likely to witness heightened inflation, exacerbating their existing economic challenges, especially considering the weakness of their local currencies. El-Zubi emphasized the necessity for these nations to proactively prepare for impending disruptions in the food market.
