Agriculture

Sugar mills double sugar production, festival sales decline

Around 13.73 lakh tonnes of sugar has been produced in the first 45 days of the current season as compared to 7.67 lakh tonnes in the first 45 days of last year while sales in the festival months of September and October 2017 have declined marginally

Sugar mills double sugar production, festival sales decline

The crushing for sugar season 2017-18 has started earlier than previous seasons.  As on 15 November 2017, 313 sugar mills were already crushing as compared to 222 sugar mills which were crushing sugarcane last year on 15 November 2016, a report released by Indian Sugar Mills Association (ISMA) has said.

Early start of crushing has resulted in higher sugar production upto 15 November 2017 as compared to same time last year. Around 13.73 lakh tonnes of sugar has been produced in the first 45 days of the current season as compared to 7.67 lakh tonnes in the first 45 days of last year, the report has said.

The main contributors to the higher production of sugar are the sugar mills in Uttar Pradesh and in Maharashtra. UP sugar mills have produced 5.67 lakh tonnes of sugar upto 15 November 2017 as against 1.93 lakh tonnes produced last year. As on 15 November 2017, 78 sugar mills were crushing sugarcane as against 55 sugar mills last year same time, according to the ISMA report.

Similarly, in Maharashtra as against 95 sugar mills which were crushing sugarcane last year as on 15 November 2016, when 1.92 lakh tonnes of sugar was produced, 137 sugar mills were crushing sugarcane this year on 15 November 2017 and 3.26 lakh tonnes have already been produced.

The third largest sugar producer state, Karnataka has produced almost the same quantity as they produced last year. The situation in the other States is almost similar to last year.

The ex-mill sugar prices which were almost flat from March 2017 to September 2017,  when the all India average ex-mill sugar prices were around Rs 3600 per quintal, has seen a fall of Rs 100-200 per quintal in various parts of the country. The fall is mostly reported for the last year’s sugar, which is generally sold at a discount whenever the new season’s sugar comes into the market, the ISMA report said.

The Government has extended the stock holding limit on traders by 2 months upto 31 December 2017, as compared to 6 months which was done in the last three occasions since April 2016.
 
Instead of witnessing an increase in sugar sales in the festival months of September and October 2017, it has bee seen that the poor offtake from the sugar mills has resulted in marginally lower sales of around 41 lakh tonnes, as compared to about 42 lakh tonnes of sugar sales in the same two months last year.  With higher production in 2017-18 sugar season (SS), the sugar sales need to improve to ensure better cash flows and a stable sugar prices, the report recommends.

Now that the current season is moving into a balanced to surplus sugar production year in 2017-18 SS, ISMA has requested the Government to withdraw the stock holding limits on sugar traders with immediate effect. It has been submitted that with surplus sugar availability and lower sugar offtake than expected, continuance of stock holding limit on traders at this stage is affecting their buying interests. This will affect cash flows, which may prove detrimental to the interests of sugar producers and very soon may impact their paying capacity to the sugarcane farmers.

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