· 462 sugar mills in the country have produced 80.90 lac tons of sugar, which is 0.4% higher as compared to last season’s production for the corresponding period. In 2015-16 SS, there were 481 sugar mills in operation on 31st December, 2015 and they had produced 80.56 lac tons of sugar till that date.
· In Maharashtra, 147 sugar mills commenced crushing operations. As was generally expected, 25 of the mills have stopped crushing. These mills are mostly in the drought affected areas of Marathwada, Sholapur and Ahmednagar. As on 31st December, 2016, 25.25 lac tons of sugar have been produced in the State as against 33.70 Lac tons produced during the corresponding period last season when 169 mills were running. It is important to note that the mills in Kolhapur, Sangli, Satara and Pune, which were not as adversely impacted by drought, are crushing at almost similar levels like last year. The mills in these four regions generally contribute for almost 55-60% of Maharashtra’s production.
· Barring some sugar mills in Marathwada and Solapur region where sugar recovery during the current season was low as compared to last season, sugar recovery % till 31st December, 2016 was 10.52% as against 10.43% as on same date last year.
· In Uttar Pradesh, 116 sugar mills are in operation and they have crushed 278 lac tons of sugarcane and produced 27.40 lac tons as on 31st December, 2016, with an average recovery of 9.86%. Last year i.e. in 2015-16 SS, 113 sugar mills were in operation on 31st December, 2015 and they crushed around 178 lac tons of cane to produce 17.97 lac tons of sugar at an average recovery of 10%. Sugar production this year in UP is higher by 52% as compared to last year same time.
· 56 sugar mills in Karnataka are in operation on 31st December, 2016, who have produced 15.60 lac tons of sugar, as compared to 15.94 lac tons produced by 63 sugar mills in 2015-16 SS on 31st December, 2015. As was expected, 5 mills have shut down operations in Karnataka on 31st December, 2016. As compared to 40.5 lakh tonnes produced by Karnataka in last season, ISMA expects 31 lakh tonnes of sugar to be produced in the State this year.
· In Gujarat, 20 sugar mills are operating during 2016-17 SS and they have produced 3.50 lac tons of sugar till 31st December, 2016. In 2015-16 SS, 19 sugar mills were in operation on 31st December, 2015, who had produced 4.61 lac tons of sugar till that date.
· In Tamil Nadu, 25 sugar mills are in operation as on 31st December, 2016 which have produced 1.25 lac tons as compared to 1.01 lac tons of sugar production by 25 mills as on 31st December 2015.
· In Andhra Pradesh and Telangana, 24 sugar mills have produced 1.80 lac tons of sugar till 31st December, 2016 and this is 0.18 lac tons less than the sugar produced by 25 mills in 2015-16 SS till 31st December, 2015.
· 11 mills in Bihar have produced 1.50 lac tons of sugar till 31st December, 2016 as against 1.37 lac tons produced by 11 mills in 2015-16 season as on 31st December, 2015. Similarly, 14 mills in Haryana,16 in Punjab, 17 mills in Madhya Pradesh & Chhattisgarh and 8 mills in Uttarakhand have together produced 4.45 lac tons, as compared to 3.85 lac tons produced on the corresponding date last year.
· As per information gathered from the main sugar belt of Maharashtra viz. Kolhapur, Sangli and Satara, most of the sugar mills in these regions will continue their operations till end of March 2017, whereas mills in Pune and Ahmednagar are likely to operate till later part of February 2017. Average sugar recovery achieved by the mills of Maharashtra so far is more or less same as that of last year till December, 2016. Early closures are mainly because of lower sugarcane production in some parts of Maharashtra, which has been accounted for while estimating sugar production from the State in the current year.
· Ex-mill sugar prices which dropped by Rs. 2 to 3 per kilo since second week of November, 2016 have started improving and are now at the levels seen a couple of months back. These prices are just enough to cover the costs of production.
· With lower offtake and sugar consumption in 2016-17, the sugar stocks at the end of the current season may be more, than being estimated earlier, by 5-10 lakh tonnes. However, one needs to do more analysis to arrive at the figure of estimated consumption.
· ISMA will carry out its second advance estimate for sugar production in 2016-17, in later part of January, 2017, which will be based on satellite images. Trend of yields and recoveries upto January, 2017 would be considered. ISMA will review the same in its Committee Meeting on 25th January, 2017, and release its second advance estimate for 2016-17 sugar production on that date.
· With higher cane price announced by State Governments like Uttar Pradesh, Punjab and Haryana, low sugar recovery being achieved in the States like Tamil Nadu, Andhra Pradesh etc. and lower capacity utilization in the drought affected States like Maharashtra, Karnataka, Telangana etc. the all India average cost of production of sugar during the current 2016-17 SS, will roughly be higher at around Rs. 35 to 36 per kilo (Rs. 2 per kilo higher than the previous year’s cost of production).
· Sugar mills should be allowed to recover at least their costs during the current season, otherwise, they would not be in a position to make payments to farmers on time and would also not be in a position to repay the loans taken from Government of India including under SEFASU and soft loans, which are due to be repaid this year.
· The first 3 months of the current season i.e. October-December 2016, has seen a big fall in sugar offtake. With weddings and family celebrations being at low key, and consumption of sugar sweetened products like biscuits, chocolates, beverages, ice creams etc. being lower due to lower availability of currency, there has been a demand destruction of almost 5 lakh tonnes of sugar. The offtake in October-December 2017, has therefore been significantly lower than last year.
· Therefore, the sugar consumption in 2016-17 SS, earlier estimated to grow at 2% over last year, to 255 lakh tonnes, will be much lower. The offtake may thus be lower to even last year’s consumption of 248 lakh tonnes.