Kolhapur: The escalated levels of sugar production in India have contributed in sugar prices decline in market prices to the point at which sugar is being sold at below its production cost, and mills are transcribing huge losses, as result of which cane arrears are getting piled.
In the past, the government had come up with various measures, including increasing Minimum Selling Price of sugar from Rs.2900/quintal to Rs.3100/quintal, to help sugar mills to clear pending arrears. But in spite of that mills failed to make payment.
However, the prompt action taken by sugar commissioner Shekhar Gaikwad suggests that cane dues in the state are likely to ease down. Currently, 5 sugar mills in the state are yet crushing until the first week of May. In the last 15 days, Rs.1000 crores arrears have been cleared. The commissioner is also assuming that once the Central government sanctions a soft loan, the pending dues will decline more. And thereafter, till the the end of the crushing season, only 10 per cent of arrears will remain outstanding.
On the contrary, sugar prices overheads the international prices harming the commodity’s competitiveness in the global market. Therefore, India has only a choice of exporting excessive stocks. However, the aspects which circumference quality and prices only compliment in a global glut of sugar and serve in depressing prices even more.
To generate revenue, various sugar bodies along with the Government have taken up measures to enhance the production of ethanol from sugarcane juice and B heavy molasses. Yet, after deliberating on all issues to a way forward the problem of excessive stocks remain to be an unsolved mystery.
Looking back to the opening of the season, the national inventory of sugar was piled to 107 LMT, and mills have also started crushing earlier. In spite of predictions of sugar production to decline in the states of Uttar Pradesh and Maharashtra owing to deficient rainfall, white grub and red rot infestations, the numbers have been quite significant.
Currently, Maharashtra stands with the production of 107.18 LMT sugar till 23rd April 2019, whereas Uttar Pradesh produced 107.07 LMT sugar till 18th April 2019.
The total production nationwide has already reached 318.35 LMT as on 24th April 2019 when 161 mills around the country are still operating. By the end of the season, the total sugar production is slated to create a new record of 326 LMT, and this will be adding to excessive stocks, which is already hampering the industry.
Excess sugar production comes as a surprise to many, whereas for few it was the expected number.
Prakash Naiknavare, Managing Director of (National Federation of Cooperative Sugar Factories Ltd) NFCSF commenting on excess sugar production said, “The production of Maharashtra with the all-time high record has not come as a surprise. We have been continuously monitoring and mentioning on it since quite long. The need of the hour is to discuss and devise a plan for liquidation of inventory piled since cane arrears have already been put in place as stated by the sugar commissioner.”