Sweeter year for UP sugar mills

Warmer winter, spread of higher-yield varieties ensure a boost to recovery and revenue

Sugar mills in Uttar Pradesh, often at a disadvantage to peers in states like Maharashtra due to a higher sugarcane price, are set for a sweeter time. While the (state government-set) cane price is to stay unchanged, mills are making seven per cent more sugar for every quintal of cane crushed, thanks to a rise in area under high-yielding varieties and a somewhat warmer winter.

The warmer winter this year could be a problem for the standing wheat and mustard crop but is a boon for sugarcane. The average recovery (percentage of sugar derived from cane crushed) is set to touch an all-time high of 10.25 per cent in this sugar season (started October 2015), up seven per cent from the previous year’s average. Recovery till January 18 was almost 10.1 per cent.

"UP mills will have a lower cost of production compared to last year, as the cane price is unchanged. Undoubtedly, this is a big benefit. The greater recovery is due to change in cane varieties and suitable weather," said Tarun Sawhney, vice-chairman and managing director of Triveni Engineering and Industries, which has seven mills in UP.

Sawhney, also president of Indian Sugar Mills Association (Isma), added the negative fallout of this phenomenon in UP will be in the form of an addition to the country's sugar  stockpile. India has had bumper sugar production for several years, resulting in lower prices and inability of the industry to pay farmers for cane.

UP mills last year made 9.55 kg of sugar from every quintal of cane. The same quantity will give them 10.25 kg this time and this comes as sugar prices have started showing signs of rising. The average wholesale price has risen by Rs 200-400 a qtl between January 1, 2015, till this Wednesday.

The UP government has kept the cane price payable to farmers unchanged at Rs 280 a qtl. So, mills' realisation from each quintal of cane crushed is better in UP this year.

Sanjay Tapriya, director with Simbhaoli Sugars, said: “Mills and farmers have worked together to change cane varieties. These have better recovery and yield, helping both. Balanced rainfall also helped. The 0.5 to 0.6 per cent recovery means a five to six per cent increase in sugar revenues, most of which will go to (improve) the bottom line of companies.”

Officials said in the 2015-16 season, the high yielding Co-0238 variety was planted on 0.4 million hectares in UP, about 55 per cent more than in the 2014-15 season. In the past three years, the total area under this higher-yielding variety has risen at least four-fold.

The yield of Co-0238 is around 80 tonnes a ha; it is 65-70 tonnes for other varieties. Sugar recovery is also better from these new varieties.

The long and dry winter from September 2015 helped in early maturing of cane in UP and the near-absence of showers ensured no waterlogging in what was planted in low-lying areas. “The absence of moisture in the fields during September-January and the huge gap between day and night temperatures helped in boosting the recovery,” an Isma official said.