Sugar stock with Tamil Nadu private mills touches 8.85 lakh tonnes

Sugar production by private mills in Tamil Nadu have caused an oversupply this season. Private mills, numbering about 25 in the state have produced 7.15 lakh tonnes of sugar through May 2015, while stocks at the time had surged to 8.85 lakh tonnes.

Palani G Periaswamy, president, South Indian Sugar Mills Association said that the stocks in hand indicate that sugar sales have come to a grinding halt. Due to surplus production at the global and national level for the past five years, defying climatic cycles, sugar prices have crashed.

He added that at current prices, even the cost of sugarcane could not be recovered, leave alone the conversion cost.

“Due to sluggish sales and high inventory, sugar mills are struggling to meet the statutory commitment of paying FRP within the stipulated time,” Periaswamy said.

He noted that cane arrears have shot up to Rs 21,000 crore nationally . Against this, the Centre has just offered a loan of Rs 6,000 crore to sugar mills. The government also made clear that this amount would be directly credited to accounts of farmers whose cane dues are yet to be settled. The central Government will provide interest subvention to the tune of Rs 600 crore for the first year only.

“It would be a Herculean task for the sugar mills who are already burdened with huge loans and increasing interest cost to service the interest from the second year as well as to repay the loan instalments also. Already due to mismatch in sugar sales realisation and cost of production, all the mills in the country are incurring a loss of Rs 900 per quintal of sugar produced,” he claimed.

This amount, he suggested, could be utilised to purchase the sugar stock held by mills to create a strategic reserve and this would improve cash flow of the mills, which in turn can facilitate the mills to settle the cane dues to the farmers or this amount can be directly paid to farmers in the form of subsidy so that sugar mills which are already stretched with heavy borrowings.

“With one more surplus season predicted, it is imperative that Central and State Governments have to come together to resolve this crisis immediately failing which livelihood of crore of one cane farmers all over the country would be in jeopardy,” said Periasamy.

[“source – business-standard.com”]