Sugar industry bitter as output piles up

The Indian sugar industry has produced a record 279.57 lakh tonnes of sugar during the current sugar season (October 2014 and May 2015) compared to 240.49 lakh tonnes for the corresponding period last year.

According to official figures, it was estimated that the sugar production for the full sugar season of 2014-15 would be around 283 lakh tonnes, similar to that of 2006-07 sugar season, which was the highest-ever sugar production.

Taking into account the estimated domestic consumption of 248 lakh tonnes and exports of 7 to 8 lakh tonnes, the country would end the season with a massive sugar stock of 103 lakh tonnes. This was 43 lakh tonnes more than the normal requirement to meet the demand of the new sugar season.

At present, only 19 sugar mills were carrying out crushing operations. During the period under review, the sugar mills in Maharashtra produced 104.75 lakh tonnes of sugar, followed by Uttar Pradesh (70.9 lakh tonnes) and Karnataka (48.99 lakh tonnes). Compared with the previous sugar season, these sugar mills produced additional 40 lakh tonnes.

Out of the total production, about 5.58 lakh tonnes of sugar (both raw and white) were exported. Of this, about 3 lakh tonnes of raw sugar was exported after the announcement of export incentives.

Since global prices had fallen to one of the lowest levels since 2009 at around 12 cents/lb, it was expected that not more than another 2 lakh tonnes of sugar would get exported in the next four months.

Industry sources said the current sugar season was as ‘worst.’ Cane price arrears of Rs.22,000 crore were yet to be paid. This was the fifth year of surplus sugar production, and there were no signs of farmers reducing their cane area, sources said. Sugar prices both in domestic and global market had fallen to the lowest levels in the last 6 to 7 years, they pointed out.

“This has worsened the financial health of the sugar industry due to which banks are not coming forward to lend further loans,” said an industry spokesman.

Unlike 2006-07, when the Government helped the industry to dispose off 110 lakh tonnes of sugar by way of export incentives and buffer stocks, the Centre during 2014-15 had announced only export assistance and that too just for 14 lakh tonnes.

The Government should immediately come out with some substantial assistance for sugarcane farmers and the sugar industry, otherwise many sugar mills won’t be able to start their operations in the next sugar season 2015-16, and sugarcane would remain un-harvested in the fields, warned the industry sources.

Points to remember:

* Sugar Production for the full season 2014-15 will be around 283 lakh tonnes

* Country will end the season with a massive sugar stock of 103 lakh tonnes

* This is the fifth year of surplus sugar production