The sugar industry in Bihar, reeling under losses for the past three years, is set to face further pressure on margins this season.
According to O.P. Dhanuka, Riga Sugar Chairman and Managing Director and former president of the Indian Sugar Mills Association, the industry has been hit by a double whammy — rising cane prices and subdued sugar prices.
“During the last three years, prices of cane have been increased from Rs 120 a quintal to Rs 225, whereas sugar prices remain subdued and much below cost of production,” Dhanuka said.
The average production cost in the State was Rs 3,241 a quintal, while the average realisation was only about Rs 2,995 in 2011-12 marketing year.
After rising during the last three to four months, prices have again started dipping because of the import of raw sugar and white sugar.
“The Government seems to hardly recognise the problems of the sugar industry. Just recently sugar prices were seen inching up to its normal range bringing some stability in the market and instilling hopes among farmers and industry.
But again, since import duties were not enhanced, imported sugar has started coming into the country thereby depressing the market. Pakistani sugar is being traded in the country,” he said.
A further fall in prices would put the interests of the five crore familes of cane growers in jeopardy, he added.
The Bihar Government, Dhanuka said, had promised to extend cane price subsidy to mills while fixing a higher cane price for the seasons 2010-11 and 2011-12. However, no such subsidy was offered, as a result of which the industry has suffered losses for three consecutive years.
The recovery rate — amount of sugar produced after crushing a tonne of sugarcane — has decreased in the State due to agro-climatic conditions and changes in soil texture and farming, he said.
“The recovery is at an average of 9.4 per cent against 10 per cent in Uttar Pradesh. Moreover, the cost of production is higher in Bihar by at least Rs 200 a quintal,” he pointed out.