PRESS RELEASE: REVISED SUGAR PRODUCTION ESTIMATE FOR 2016-17 SS
ISMA had previously estimated sugar production for the current season at 213 lac tons in its Meeting, attended by members from across the country, on 25th January 2017. However, yield of the sugarcane harvested in January and February 2017, in Maharashtra, Karnataka, Andhra Pradesh and Telangana, which were badly affected by the drought that the States faced in the last couple of years, turned out to be substantially lower to what was being expected. In some areas, the yield per hectare in the month of February 2017 was 40 to 50% lower than last year at the same time. In addition to this, higher need of seed for increased acreage, especially in the State of Maharashtra, also resulted in lower sugarcane availability for crushing this season.
2. Accordingly, the members of ISMA in its meeting held on 6th March 2017, representing sugar producing States from across the country, felt that there was a need to revise the sugar production estimates in the current season. After detailed discussions and after considering the views of members representing respective States, ISMA is of the opinion that the sugar production in 2016-17 SS would be around 203 lac tons.
3. The mills in Maharashtra have almost closed their crushing operations except 17 mills and, therefore, the State is expected to produce around 42 lac tons. Similarly, the mills in Karnataka have also closed their crushing operations, but considering that it will have a special season from July to September, 2017 in South Karnataka, it is expected that the State will produce 21.25 lac tons.
4. However, sugarcane availability, sugarcane yields, as well as sugar recovery in the State of U.P. is substantially better than last year. The trend in U.P. is, therefore, very different to the drought affected States in Western and Southern part of the country. Currently, there are 107 sugar mills which continue to crush sugarcane in U.P., which is higher than the mills which were crushing last year at the same time. Sugar production this year is 9 lac tons more than what it was at the same time last year. Most of the mills are expected to run till the latter part of April 2017. Members from U.P. felt that they will together produce around 85 lac tons of sugar this season.
5. On the other hand, the sugar sales and off take from sugar mills is substantially lower as compared to last year. Instead of seeing an increase in the sales, the mills are witnessing a drop in the same in comparison to last year. We have already received reports from all sugar mills, and noted that in the first 4 months of the current season i.e. upto end of January 2017, sales by sugar mills has been lower by 7.5 lac tons. In the meeting of ISMA yesterday, members from all the States reported that the sugar off-take was dull and, therefore, the off-take in February as well as in March, is also on the lower side. The main reason for lower sales could be demonetization, drop in sugar purchase by the bulk consumers, price elasticity affecting demand and anticipated lower demand by State Governments because of proposal to remove subsidy from Central Government on PDS sugar. Therefore, as compared to last year’s sugar off-take of 248 lac tons, ISMA now expects that the sugar sales this season will be between 238 and 240 lac tons.
6. Considering the opening balance of 77.5 lac tons, (which has been reported by all sugar mills to the Government) and considering an estimated sugar production of 203 lac tons in the current season and consumption of 238-240 lac tons, the closing balance in the current season would be 40 to 42 lac tons. This balance will be enough to meet the domestic requirement till almost end of November 2017.
7. With higher sugarcane availability expected in next season in Maharashtra, the sugar mills in West as well as in South India should be starting their crushing in first half of October 2017 which is the usual practice therein. Also, with Diwali now being earlier on 19th October, 2017, the mills in North India will also start by latter part of October 2017. Hence, sugar from new season would be available in the market by end of October 2017.
8. Therefore, if the opening stocks of sugar on 1st October 2017, is enough to meet the interim period, by which new sugar is available in the market, there is absolutely no need to supplement the domestic availability with any sugar imports. The current sugar prices have been stable for the last few weeks, in fact a correction has also happened to the extent of Rs. 50 per quintal and, therefore, the prices also should not be any reason to supplement domestic availability. Nevertheless, once the crushing period gets over in the latter part of April 2017, ISMA will again review the above along with its members from across the country.