Sugar Production All Time High, Prices Decline, Cane Arrears Rise


Image Credits: Financial Tribune

The All India sugar production upto March 31, 2018 reached 281.82 lakh tonnes. This is about 92.95 lakh tonnes higher than last year. The estimated sugar production in the current season is about 45 percent higher than last season, Indian Sugar Mills Association (ISMA) has said.

Out of 524 sugar mills which were operating during the current season, 193 mills have stopped crushing and remaining 331 sugar mills were in operation as on March 31, 2018. However, it is understood that few more mills in Maharashtra and Karnataka might end their crushing in a couple of days time, the sugar mills body has further added.

According to ISMA, 187 sugar mills which were in operation in Maharashtra have produced 101.27 lakh tonnes upto March 31, 2018 while 81 sugar mills in the State had closed operations till the end of March.

The sugar mills in Uttar Pradesh have produced 95.40 lakh tonnes upto March 31, 2018. Currently 111 sugar mills are crushing sugarcane in the state.

The sugar mills in Karnataka have produced 35.56 lakh tonnes in the current sugar season upto March 31, 2018. Out of 65 sugar mills operated this season, almost 90 percent of the mills i.e. 59 sugar mills have ended their crushing and only 6 mills are running as of now, the ISMA report has said.

Falling sugar prices
According to the sugar mills body, due to an unexpected surplus sugar availability of around 45 lakh tonnes of sugar over and above the required closing balance during the current 2017-18 season, domestic ex-mill prices have crashed once again and all India average ex-mill sugar price are hovering around Rs. 3000 per quintal. This is already about Rs. 500 to 600 per quintal below the cost of production of sugar.

Though the Government has announced minimum indicative export quota (MIEQ) of 20 lakh tonnes for exports to move out some surplus stocks out of the country, due to depressed world sugar market, sugar importers are offering an FOB price at the port of around 350 US$ per tonne for exports.

Rising sugarcane arrears
Sugarcane price arrears of over 14 days across the country is estimated to have touched Rs. 16,000 to 17,000 crore by end of March 2018. As on March 31, 2018, the arrears in U.P. were Rs. 7,200 crore. The cane arrears in Maharashtra is expected to be Rs. 2,500 crore, in Karnataka at about Rs. 2,500 crore and other states like Bihar, Punjab, Uttarakhand, Haryana, Tamil Nadu, Gujarat, Andhra Pradesh and Telangana all put together are expected to have cane price arrears of about Rs. 4,000 crore, the ISMA report has said.

Considering lower sugar price realisation from domestic sales as well as depressed global sugar market, sugar mills are unable to generate sufficient funds for payment of cane price to the farmers on time.

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