Sugar production at the end of November 2012 was 2.7% lower than the production same time last year. This was revealed by the Indian Sugar Mills Association (ISMA) recently.
The release added that with crushing starting well in Uttar Pradesh, which actually commenced late, the sugar production upto December 15, 2012, crossed the production achieved last year upto December 15, 2011, and was more by 2%, at 49.06 lakh tonnes against 48.15 lakh tonnes last year same time. It said, “455 mills are operational as on Dec 15, 2012, 18 less as compared to 473 mills last year.”
Maharashtra produced 18.80 lakh tonne of sugar as against 18.33 lakh tonne of sugar last year, with 155 mills operational to-date, 10 less than last year (14 less in the cooperative sector, but 4 more in the private). Nevertheless, capacity utilisation of Maharashtra mills is better, as they crushed more cane, as compared to last year.
ISMA has estimated around 65 lakh tonnes of sugar production from Maharashtra in 2012-13, though with a shorter season, mainly due to lower production and also diversion of sugarcane to fodder in Maharashtra. Recoveries are almost same at last year level i.e. 10%.
Uttar Pradesh has already produced 10.33 lakh tonnes of sugar. This is about 20% less than last year same time. Last year, 121 mills were operational as against 116 mills this year. This is because few mills in east UP have to still start their crushing. With 8.56% sugar recovery till now, it is better than last year. ISMA is expecting a total sugarcane production of 140 million tonne, of which 85-86 million tonne would be available to the sugar industry, at about 61% drawl.
The UP state government has declared an all-time high SAP for sugarcane, which is Rs 40/qtl higher than last year. With 17% hike in SAP over last year, the cane prices offered by sugar mills i.e. the SAP are more lucrative than the prices offered by the local sweeteners.
However, even though the UP mills could have a better capacity utilisation this year and reduce the average fixed costs, the historically high SAPs in UP, leading to high costs of production, is nullifying the expected benefits. The difference between prevalent ex-mill prices and the resultant cost of production in UP, could lead to losses to mills to the tune of Rs 4,000 crore, which might reflect in the form of cane price arrears in 2012-13. ISMA has estimated 79 lakh tonne of sugar production in UP in 2012-13.
Karnataka has produced 11 lakh tonne of sugar against 9.05 lakh tonne of sugar last year.
Tamil Nadu & Andhra Pradesh both have produced about 25% more sugar than last year till date. TN has produced 2 lakh tonne with 29 operational mills, while Andhra Pradesh with lesser number of operational mills has produced about 1.70 lakh tonne of sugar with higher cane crush but little lesser reported recoveries as compared to last year.
ISMA is expecting that sugar millers pay about Rs 66,000 crore for the sugarcane during 2012-13. With lower sales realisation and higher sugarcane payment to farmers, ISMA has already requested government to increase the import duties on raw sugar from current level to the normal rate of 60%, so as to avoid cane price arrears during the season.
The association also hoped that the government would soon accept the Rangarajan Committee recommendations on reforms on sugar sales, which would help the industry in reducing losses on account of levy sugar procurement and removing regulated release mechanism so that mills could plan their financial outflows as per market conditions.
