Cane price row: Sugar output nosedives by 67% in Oct-Nov

Sugar production stood at 24 lakh tonnes in the year ago period: ISMA

India's sugar output declined by 67% to 8 lakh tonnes in the first two months of 2013-14 marketing year as a large number of mills, mainly in Uttar Pradesh, have not yet started crushing operations due to logjam over high cane prices.

Sugar production, the world's second largest producer and biggest consumer, stood at 24.4 lakh tonnes in the year ago period, according to data compiled by Indian Sugar Mills Association (ISMA).

The sugar marketing year runs from October to September.

Yesterday, UP sugar millers refused to start operations despite tax incentives and a warning by the state government to break the deadlock over higher cane prices.

Compared to 400 sugar mills which were crushing sugarcane at the end of November 2012, only 208 sugar mills have started crushing operations till now in this season, ISMA said.

"The main reason for just about half the sugar mills having started till now as compared to last year is because of the uncertainty on the cane pricing for 2013-14.

"The state governments in UP as well as in Karnataka have fixed unviable sugarcane prices which have deterred mills from starting crushing due to obvious losses expected at these prices and resultant expected cane price arrears of farmers," ISMA said in a statement.

The association said that only 21 sugar mills have started cane crushing this season in UP as compared to 90 sugar mills at the end of November last year.

In Maharashtra, the country's largest sugar producing state, only 102 mills have started crushing as of now against 149 mills which had started crushing in the year-ago period.

"As a result, only 4.31 lakh tonnes of sugar have been produced in the current season (in Maharashtra) as compared to 10.24 lakh tons produced last year upto end of November," it added.

Karnataka, the third largest sugar producing state, has produced only 2 lakh tonnes in the first 2 months of current marketing year in comparison to 7.6 lakh tonnes produced last year. Only 37 mills are in operation now in the state against 56 mills at the same time last year.

India is estimated to produce 250 lakh tonnes of sugar in the 2013-14 marketing year against 251 lakh tonnes in previous year. However, the government yesterday pegged the domestic output lower at 244 lakh tonnes in the current marketing year.

The annual domestic demand is seen at 220-230 lakh tonnes.