Falling sugar prices have prompted sugar mills in Maharashtra to seek permission for production of more ethanol. A proposal is expected to be submitted by the Maharashtra State Cooperative Sugar Factories Federation (MSCSFF) to the state cooperation minister on Tuesday, senior officials said. Federation representatives will then urge the minister to take up the issue with the Centre on a priority basis.
The country's sugar industry has been reiterating that to deal with surplus sugar, it would convert cane juice into ethanol to be blended with petrol according to the mandatory 5% requirement. "Sugar prices have fallen to R2,750 per tonne and the cost of production has risen to R3,400 per tonne. This way, factories will end up in loss and paying FRP will become a major issue for the industry," Sanjeev Babar, MD, MSCSFF, said. As of now, ethanol rates are more remunerative at R41 per litre. Production of more ethanol will not only help meet the 10% ethanol blending target but also save forex, reducing dependence on imports, he added.
Babar had earlier indicated that it has become difficult for the mills to absorb the international market rates. Factories will not be in a position to pay the fair and remunerative price to growers. The federation will soon seek the Centre's help to avoid another crisis,” he had said. According to Babar, the industry pays revenues to the tune of R5,000 crore in the form of taxes to the government. "Maharashtra produces ethanol as per demand. The state has the capacity to produce around 160 crore litres and currently produces only around 60 crore litres, " he pointed out.
Maharashtra's sugar output could rise by 20% to 9.3 million tonne in 2014-15, according to estimates by ISMA. As such, the coming season could also see surplus production which, if utilised well, will help reduce the quantity of sugar, he said.
Indian Sugar Mills Association had recently made a case for more ethanol production. In view of surplus production and high opening stock of about 7.5 million tonne, the industry body said new avenues should be explored to dispose surplus sugar, such as conversion of cane juice into ethanol with government assistance, including incentives and subsidies. "One billion litres of additional ethanol procurement can reduce about 1.7 million tonne of surplus sugar from the market. This can help the industry with better cash flows," it had said.