PATNA: The prospects of highest ever output of 7 lakh tonne sugar in the state has pushed sugar mill owners into a huddle. Reason: Fall in its prices, currently hovering around the Rs 2,900-3,050 per quintal mark, has forced them to start counting their losses.
As other sugar producing states are also set to post higher than expected output, totalling 300 lakh tonne for the 2017-18 season, the ‘pressure’ on domestic prices is not likely to ease soon.
Alarmed by the scenario, Bihar Sugar Mills Association has already sent an SOS to the government urging it to provide a minimum cash subsidy of Rs 40 for every quintal of cane crushed (over 70 lakh tonne by the end of crushing season) to tide over the losses of Rs 700-800 per quintal sugar.
“Cost of sugar production is higher in the state on account of low sugar recovery at 9.55%, which in neighbouring Uttar Pradesh is high at 11.5%, and shorter duration of cane crushing season than other sugar producing peers,” explains Naresh Bhatt, secretary, BSMA, confirming the development.
In monetary terms, the expected hit for 10 sugar mills has been pegged at Rs 485 crore on the basis of prevailing rates, which, if they soften further in the wake of surplus production flooding the market in days to come, will push
■ State is set to record 7 lakh tonne sugar output for the first time
■ Cost of production is high in state due to lower recovery rate
■ Millers say the glut in price will
the losses further.
“The millers have already crushed 64 lakh tonne of sugarcane till Wednesday and are likely to close the season with highest ever crushing in excess of 70 lakh tonne for the first time,” Bhatt said.
On being asked how a token subsidy (Rs 40 for each quintal of sugarcane purchased by the millers) would help the sector tide over the crisis, the BSMA secretary said, “Government has been stepping in every time the industry is in a down cycle to hand hold and also ensure that farmers’ dues are paid on time.”
While the supposed losses on every quintal of sugar sold appear to be insurmountable on the face of it, the subsidy, if calculated in terms of the quantity of
result in losses of Rs 485 crore
■ Demand Rs 40/quintal subsidy to tide over the problem of plenty
■ Govt gets Rs 60 cr revenue from the sector after GST roll out
sugarcane crushed, becomes substantial and the rest would be more than met by the sale of byproducts.
Bhatt, however, says that subsidy outgo is not a big deal for the government, which is generating a revenue of Rs 600 crore from the sector after introduction of GST of 5% on sugar and 28% on molasses, but would be a great help for the millers in meeting their payment obligations to the cane growers of the state.
The BSMA has also urged the state to write a letter to the Centre to permit at least 20 lakh tonne of sugar, by removing tax on exports, to encourage overseas sales for overcoming glut-like situation glaring in the face of domestic sugar producers.