Sugar mills have been able to produce higher volume of the sweetener in the first quarter of the season due to better yield of sugarcane in Uttar Pradesh, but the euphoria of beating a lower output estimate may soon be over with factories in Maharashtra closing down one after another, earlier than the regular schedule.
As much as 25 mills in the top sugar-producing state of Maharashtra have closed factories due to a severe shortage of sugarcane. More mills may soon declare an end to their crushing season in the next one month even though they usually continue until May in a normal year. In Maharashtra, 147 sugar mills commenced crushing operations, while 25 in drought-affected Marathwada, Sholapur and Ahmednagar have stopped these operations, the Indian Sugar Mills Association (ISMA) said in a statement. However, mills in Kolhapur, Sangli, Satara and Pune regions, which contribute almost 55-60 per cent of the state's production, are going on with the crushing at almost similar levels as last year. Sugar production in the country has touched 8.09 million tonnes in October-December quarter while demand remained low due to demonetisation, ISMA spokesman Sanjay Banerjee said. This year, 462 mills produced 8.09 million tonnes of sugar as against 8.05 million tonnes manufactured by 481 mills in the same quarter of last year, he said. Overall sugar production of India, which is the world's second largest producer and biggest consumer, is pegged at 22.5 million tonnes in 2016-17 (October-September), lower than 25.1 million tonnes last year. “There has been a demand destruction of almost five lakh tonnes of sugar. The offtake in October-December 2016-17 has therefore been significantly lower than last year,” he said. As per ISMA data, sugar production in Uttar Pradesh, the country's second biggest producer, increased to 2.74 million tonnes from 1.79 million tonnes. In Maharashtra, sugar declined to 2.52 million tonnes from 3.37 million tonnes. Karnataka too witnessed a fall in sugar output to 1.56 million tonnes in October-December from 1.59 million tonnes in the year-ago period. Sugar output in Gujarat was lower at 3,50,000 tonnes in the first three months of this year as against 4,61,000 tonnes in the year-ago. Production in Bihar was 1,50,000 tonnes, Tamil Nadu at 1,25,000 tonnes and Andhra Pradesh and Telangana at 1,80,000 tonnes. According to ISMA, ex-mill rates have started improving and prices are just enough to cover the cost of production. The cost of production of sugar is estimated to be around Rs 35-36 per kg this year.