Indian sugar mills association

Sugar output rises despite delay in cane crushing in Maharashtra

Date:	20 Dec 2011

Source:	The Business Standard

Reporter:	Dilip Kumar Jha

News ID:	778

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New Delhi: Sugar production in India has risen around 19% so far despite a slow start in cane crushing in the biggest producing state of Maharashtra, allaying apprehension that output in the world`s second-largest producer may dip below forecast due to lower-than-expected yield.

Production rose to 4.58 million tonnes until December 15 since the marketing year began on October 1, compared with 3.86 million tonnes a year before, according to the data released by the Indian Sugar Mills Association on Monday. Isma has forecast sugar output in 2011-12 at 26 million tonnes, sharply higher than the food ministry`s prediction of 24.6 million tonnes, compared with the expected consumption of around 21.5 million tonnes. The country had sugar-surplus in 2010-11 after two successive years of a domestic shortage.

At least two-weeks` delay in cane crushing in Maharashtra this year beyond the usual period of early November was offset by early crushing in UP, mainly due to a state diktat, a senior industry executive said. While cane crushing in Maharashtra was delayed due to a disagreement between farmers and sugar mills and co-operatives over cane pricing, district administrations in UP pressured mills to start crushing early by purchasing cane at the high price fixed by the state.

Sugar output in Uttar Pradesh surged by more than 50% to 1.28 million tonne until December 15 from a year before, while production in Maharashtra rose at a lower-then-expected pace of 7.7% during the period to 1.75 million tonne due to the delay in crushing. Karnataka churned out 8,25,000 tonne of sugar during the period, up more than 12% from a year earlier. As many as 452 sugar mills have started crushing as of December 15, compared with 445 a year before.

“We stand by our production forecast of 26 million tonne for 2011-12, as recovery from cane has been higher by up to 1% in Maharashtra. I heard that yield has been less there, but higher areas and better recovery will more than compensate lower yield. We still expect output in Maharashtra will touch our forecast level of 9.2 million to 9.3 million tonne level,” Isma director general Abinash Verma told FE.

In September, the agriculture ministry had forecast sugarcane production to rise to 342.2 million tonne in the crop year through June 2012 from 339.2 million tonne last year. Food minister KV Thomas last week said he still believes the official estimate of 24.6 million tonnes is fair, based on inputs from state governments so far.

“Although production has risen by around 19% so far, the pace may slow a bit in the coming days, but we will end the season with the output level of 26 million tonnes,” Isma`s Verma said. Sugar output to remain high: Isma Dilip Kumar Jha / Mumbai December 20, 2011, 0:59 IST The Business Standard The Indian Sugar Mills Association (Isma), has kept the output forecast unchanged, despite several adversities faced by crushing firms across the country.

“We are keeping our fingers crossed on the previous forecast made in the beginning of the crushing season at 26 million tonnes (mt) for the current sugar season (October 2011-September 2012)," said Abinash Verma, secretary general of Isma.

Output till December 15 was reported at 4.58 mt, a rise of 19 per cent from 3.86 mt in the same period last season. Higher output, however, can be attributed to more mills remaining operational this year.

As against 445 mills reported functional last year till December 15, as many as 452 were crushing by the same time this season.

Though mills started crushing slightly late this year, especially in the largest-producing state, Maharashtra, production has registered an overall jump of 19 per cent.

Similarly, the second-biggest producing state, Uttar Pradesh, registered a significant jump in production of 1.29 mt till December 15, compared to 0.86 mt for the same period last year.

The output in Maharashtra was reported 12,500 tonnes higher at 1.75 mt by December 15 this year, compared to 1.63 mt in the same time last year. The think tank in Maharashtra earlier forecast output at 9.3 mt, later revised downwards to 8.7 mt. With the higher recovery noticed through crushing of the early variety cane, the output forecast has been restored to 9.3 mt.

Similarly, production in Karnataka during the same period is also higher at 82,500 tonnes, compared to 73,500 tonnes last year.

Meanwhile, the case filed by mills challenging the Uttar Pradesh government`s cane pricing (state advised price or SAP) formula in the Allahabad High Court was deferred again on Monday. It is scheduled to come for hearing on Thursday.

The mills in Uttar Pradesh have been paying Rs 240-250 per quintal for cane since the beginning of the season, compared to Rs 205-210 a quintal in the previous one.

At the current price, the industry is incurring a loss of Rs 2.50 a kg.

“Whatever money is lost for extra payment for price is lost forever. There is no precedent in India to recover money from farmers. Hence, early resolution of the case would provide relief for the industry," said a senior industry source.

Mills produced 24.5 mt during the last season. Estimating higher output this season, Verma said, “A clear picture would emerge by January-end. For the time being, we estimate a 26 mt output for the current season."

PTI adds: The wholesale sugar market ended on a flat note on Monday, as prices moved in a narrow range on alternate bouts of trading and settled at previous levels.

Marketmen said an adequate stocks position against sporadic demand mainly kept prices steady.

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