India, looking at record sugar output, battles rising surplus and low prices

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Sugar production in India reached 28.18 million tonnes at the end of last month, up nearly 9.3 million tonnes, the Indian Sugar Mills Association (ISMA) said, sending prices crashing and millers scouring for relief

The estimated sugar production in the current season is about 45% higher than last season, ISMA said, adding that of the 524 sugar mills which were operating during the current season, 193 mills have stopped crushing and remaining 331 sugar mills were in operation as at end of March.

ISMA gave following details in a statement:

  • 187 sugar mills which were in operation in Maharashtra have produced 10.12 million tonnes up to March 31, 2018.   81 sugar mills in the State had closed operations till 31st March 2018.
  • The sugar mills in U.P have produced 9.54 million tonnes up to March 31, 2018.  Currently 111 sugar mills are crushing sugarcane in U.P.
  • The sugar mills in Karnataka have produced 3.556 million tonnes in the current season up to March 31, 2018.  Out of 65 sugar mills operated this season, almost 90% of the mills i.e. 59 sugar mills have ended their crushing and only 6 mills are running as of now.

Due to an unexpected surplus sugar availability of around 4.5 million tonnes of sugar over and above the required closing balance during the current 2017-18 season, domestic ex-mill prices have crashed once again and all India average ex-mill sugar price are hovering about Rs. 3,000 per quintal.  This is already about Rs. 500 to 600 per quintal below the cost of production of sugar, ISMA said.

A depressed world market is also not helping, as importers are offering lower prices to Indian exporters.

It said cane price arrears of over 14 days across the country is estimated to have touched Rs. 16,000 to 17,000 crore by end of March.  As of last month end, arrears in U.P. were Rs. 7,200 crore.  Arrears in Maharashtra are expected to be Rs. 2,500 crore, in Karnataka at about Rs. 2,500 crore and other states like Bihar, Punjab, Uttarakhand, Haryana, Tamil Nadu, Gujarat and Andhra Pradesh and Telangana all put together are expected to have cane price arrears of about Rs. 4,000 crore.

Considering lower sugar realisation from domestic sales as well as depressed global sugar market, sugar mills are unable to generate sufficient funds for payment of cane price to the farmers on time, ISMA said.

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