The Centre has declined to provide any subsidy to sugar mills for undertaking crushing early. This comes at a time when the food ministry has asked the mills to start the season in October itself so that the country can avoid shortage during the festival period.
The Pune-based West Indian Sugar Mills Association had sought an assistance of Rs 500 per tonne for the quantity of sugarcane to be crushed in October due to lower recovery of juice, sources said.
The food ministry, which took a decision in eight days, has declined to accept the demand saying it is in mills’ interest to start crushing early to avoid losses, as the recovery rate of cane juice will be lower in summer.
In a letter to the millers’ association, GS Sahu, a director in the food ministry, has said that a bumper crop of sugarcane is expected in the next season starting October 1 in Maharashtra and “crushing should start early, otherwise recovery will suffer at fag end of the season due to increasing temperature.”
He has stated that the recovery rate in Maharashtra generally remains less than 8 per cent in October and between 9 per cent and 9.7 per cent in November.
The Centre expects mills to start crushing from around October 22, three days after Diwali, which is the normal schedule.
Sahu said in his letter that pre-poning crushing operation by two weeks might not cause a substantial loss of recovery. The Association had said that an average loss of recovery would be 1.5 per cent in October if mills start crushing. Industry sources said the government is aware that this year Diwali will be celebrated in October whereas it normally falls in November.
The crushing, which starts after Diwali does not mean that mills will bear losses, the sources said. Even farmers need to be convinced to take a loss, as their cane price will be determined on the basis of juice recovery for the entire season.
“There is no need to be hasty in crushing. If mills start early, the overall recovery will be lower in the season, which will adversely impact farmers’ income,” said Raju Shetti, MP and farmer leader of Maharashtra. “If such a decision is taken, the overall sugar production will also fall,” he said, adding that the country has enough stocks.
According to BB Thombare, president of West Indian Sugar Mills Association, majority of the factories would not be able to start before November in the absence of subsidy.
He said the Centre had provided subsidy in the past for facilitating early crushing. The government must know that Diwali is celebrated for a week in Maharashtra, he added.
The Centre has insisted on early crushing in the next season as there could be a shortage if sugar is not produced in October itself.
Under pressure from a section of the mills, the government did not allow import beyond 5 lakh tonnes at zero duty. Now that prices have been rising, the food ministry has put pressure on mills to start their factories early.
Maharashtra and Karnataka mills always start the crushing before Uttar Pradesh, where cane is also matured late. This year, sugarcane sowing in Maharashtra has increased to 9.18 lakh hectares as of August 25 from 6.33 lakh hectares in the year-ago period, up by 45 per cent.
Shetti said there could be slight fall in sugar production from the expected as productivity had been hit due to erratic rainfall and late monsoon rains.
The farmers will harvest cane only after retreat of monsoon and when fields dry, he said, adding that there could also be a delay in withdrawal of monsoon this year.
Traders estimate mills in Maharashtra to produce about 7 million tonnes of sugar next season, up from about 4 million tonnes in 2016-17 (October-September).
India’s sugar production declined to 20.3 million tonnes this season from 25.1 million tonnes last year due to drought in Maharashtra and Karnataka.
Experts estimate sugar production to touch 23-24 million tonnes in 2017-18.
Official data also shows that price in Delhi has increased to Rs 44 a kg at the start of the festival season with Ganesh Puja from Rs 42 a kg in May.