The country’s sugar output rose 6.9% till February-end in the marketing year through September from a year before, further worsening a glut in the market and keeping mills’ margin under pressure.
The country produced 24.77 million tonnes till February 28, compared with 23.18 million tonnes a year earlier, the Indian Sugar Mills Association (Isma) said on Wednesday. Since bulk of the production is over, and most mills in Maharashtra and Karnataka are set to close, the pace of production is expected to slow down in the coming days.
Isma has projected the country’s sugar production for 2018-19 at 30.7 million tonnes, lower than the record output of 32.5 million in the previous year, but higher than any other year in the past. Consumption, meanwhile, is expected to remain 26 million tonnes this year.
Bumper production has further aggravated a glut in the market, and continues to pressure ex-factory sugar prices, which are propped up by a minimum sale price of Rs 31 per kg, set by the government. The market has already been awash with supplies, thanks to massive stocks from the previous season (10.7 million tonnes) and yet another year of surplus production.
Maharashtra produced 9.21 million tonnes of sugar until February 28, up 8.9% from the corresponding period last year, according to the Isma data.
In Uttar Pradesh, mills produced 7.32 million tonnes of sugar by the end of February, marginally lower than the 7.36 million tonnes produced a year before. Around 117 mills were in operation this season.
In Karnataka, 41.69 lakh tonnes were produced so far this season, with 32 mills having stopped their operations, while 35 are still into work. The state had produced 33.92 lakh tonnes of sugar in the same period last year, when 38 mills were in operation, and 27 mills had closed.
Tamil Nadu has produced 4.70 lakh tonnes of sugar so far this sugar season from 32 mills still in operation, as compared to 3.58 lakh tonnes produced by 26 sugar mills in the corresponding period of 2017-18 SS.
Gujarat has produced 8.80 lakh tonnes, with 14 sugar mills in operation. Last year, 15 sugar mills were in operation, and they had produced 8.23 lakh tonnes in the same period. In Andhra Pradesh and Telangana, 25 sugar mills have produced 5.70 lakh tonnes, as compared to 5.71 lakh tonnes produced by 22 sugar mills on the corresponding date last season.
In Bihar, Uttarakhand, Punjab, Haryana and Madhya Pradesh and Chhattisgarh, sugar production has been in the order of 5.75 lakh tonnes, 2.55 lakh tonnes, 4.60 lakh tonnes, 4.15 lakh tonnes and 4.10 lakh tonnes, respectively.
Amid fears that misconceived notions about health hazards caused by sugar may dent its consumption, Isma organised an event on Wednesday to raise awareness about the sweetener and its nutritional values.
The country’s sugar stocks at the end of this season in September could cross 11 million tonnes, against 10.7 million tonnes a year earlier.
Low realisation from sugar by mills, despite the minimum sale price, has raised cane arrears, which jumped to Rs 20,159 crore as of February 22, a record for this time of the year. However, with the government deciding to give soft loans of over Rs 10,000 crore and increasing the minimum ex–mill price to Rs 31 per kilo from Rs 29 earlier, the arrears may get reduced faster, according to Isma.
“But a very high monthly sugar sale quota fixed for March, 2019, has reduced the sugar prices by over Rs 100 per quintal (recently), which will adversely impact the millers and negate some of the good steps taken by the government recently,” Isma said.
Meanwhile, Sugar mills have offered to supply around 51 crore litre of ethanol, produced from B heavy molasses and sugarcane juice, probably for the first time in the history of the sector. This is expected to reduce sugar production by 5 lakh tonnes.
Till February — in the first three months of the current year’s supply period — about 12 crore litre of ethanol, made from B heavy/sugarcane juice, have been supplied. This has, in turn, reduced sugar production by 1lakh tonnes so far in the current season, Isma said on Wednesday.