By Rajendra Jadhav
       SOLAPUR, India, Dec 19 (Reuters) - India, the No.2 sugar
producer, has been a net exporter of the sweetener for the past
six years.
    However, it is set to ban exports in the crop year that
started in October and may even be forced to import in the
following year as farmers turn to other crops, according to
traders, industry officials, and farmer interviews.
    The production decline is driven by unusually dry
conditions, fuelled by El Nino, in the western state of
Maharashtra and its neighbour to the south, Karnataka, which
along with Uttar Pradesh in the north account for over 80% of
Indian sugar output.
    Reuters spoke with more than 200 farmers during a recent
visit to Maharashtra and Karnataka.
    Here are key details on India's sugar production, as well as
Reuters' findings during its trip to key growing areas in the
two states:
    
    * India produced 33.1 million metric tons of sugar in the
year that ended in September, behind only Brazil's expected 46.9
million tons.
    * India supplies 12% of globally traded sugar. It has
exported an average of 6.8 million tons of sugar over the past
five years, making it the No.2 shipper in that period. It was
surpassed last year by Thailand.
    * The Indian Sugar Mills Association said in August net
production could fall to 31.7 million tons in the year that
began in October.
    * More than 180 farmers from 11 cane-producing districts of
Maharashtra and another 49 farmers from Karnataka all told
Reuters lower monsoon rainfall during the crucial growth phase
stunted crop development. Reuters spoke with at least 10 farmers
in each of the districts that account for most production in the
two states. India is home to some 50 million sugar farmers.
    * Reuters calculated the drop in per-acre cane yields and
likely drop in the next year’s cane area using an average
derived from responses received from farmers scattered across
key growing districts, cultivating different kinds of cane
varieties. Some varieties mature in 10 months, while others take
up to 18 months.
    * Internal forecasts from five trading houses for this
year's output range between 29 million and 30 million tons.
Reuters calculations based on farmer interviews found output
could drop 12.2% this year to 29.05 million tons.
    * Output could fall further the following year, with three
houses predicting a crop in the 25 million to 26.9 million ton
range, also in line with Reuters' calculations for production of
26.6 million tons.
    * India's sugar consumption is set to hit a record 29.2
million tons this year, rising to roughly 30 million tons the
following year, according to traders' forecasts.
    * In Maharashtra, the lower rainfall led to a 16% average
drop in cane yield, with some regions experiencing declines of
up to 40%, according to farmers. 
    * A 10% decline in cane area in Maharashtra, according to a
government official, coupled with potential diversions for
fodder and jaggery-making in 2% of the crop, would lead to a 28%
reduction in net sugar production in the state to 7.55 million
tons this year, based on Reuters calculations.
    * Karnataka faces a 13% reduction in cane cultivation area
and anticipated yield drops of 25% for the current year,
according to the survey of farmers. That indicates a potential
decline in sugar production to 3.7 million tons. 
    * However, Uttar Pradesh, with better irrigation, is
expected to deliver a 9.7% increase in output to 11.5 million
tons this year, rising to 12.4 million tons next year due to
lower sucrose diversion for ethanol, according to trade houses.
    * Farmers across key growing areas of the two states,
grappling with water scarcity, told Reuters they plan to either
reduce cane cultivation or abandon it totally. 
    * Calculations based on their feedback could result in a 
potential 32% reduction in Maharashtra's sugarcane area and a
29% decrease in Karnataka's for the marketing year starting
October 2024. Several factors, including rainfall in next year's
monsoon, will ultimately determine the crop size.  
    * Shrinking planting could slash Maharashtra's production
next year to 5.1 million tons and Karnataka's to 2.6 million
tons, which would be their lowest since the 2016/17 crop year.
    * The availability of ratoon crop is also expected to drop
as many farmers were forced to uproot the plants because of
water scarcity. Ratoon is the cane root stub after the first
harvest, which remains in the ground for a second harvest.
    * Maharashtra mills said that the sugar recovery rate - the
amount extracted from cane during milling - is lower than normal
due to higher temperatures.
    
 Net sugar output in mln tons    2022/23    2023/24*   2024/25*
* Maharashtra             10.53       7.55        5.1
           Karnataka              5.98        3.7         2.6
         Uttar Pradesh            10.48       11.5       12.4
            Others                6.11        6.3         6.5
             Total                33.1       29.05       26.6
    The above figures for 2022/23 are from official data and the
forecasts for the following two years are calculations based on
Reuters' survey of farmers in Maharashtra and Karnataka. The
estimates for Uttar Pradesh are based on inputs provided by
trade houses.
    * For the 2023/24 period, the government's recent decision
to limit diversion of sugar up to 1.7 million tons for ethanol
production has been factored in.
    ** For 2024/25, it is presumed the government will prohibit
ethanol production from B-heavy molasses and cane juice/syrup.

          

 (Reporting by Rajendra Jadhav; Editing by Tony Munroe and
Sonali Paul)