Five new sugar mills to join embattled UP sugar sector

Even as a substantial dip in sugarcane acreage and production awaits sugar mills in Uttar Pradesh, five more units are likely to join the beleaguered sugar sector and start crushing in the 2008-09 season, slated to kick off from October 2008.

This addition will take the total number of functioning sugar mills in UP to 137 from 132. According to official source, the new units are being set up by the Birla and Balrampur Groups.

The new mills are coming up at Karimganj and Amir Khan-ka-Majra (Rampur district), Niharpur (Shahjahanpur), Baghauli (Hardoi) and Hata (Kushinagar).

The units are being established by the Rana Group (Rampur), Balrampur (Shahjahanpur), Agarwal Group (Hardoi) and Birla Group (Kushinagar). The crushing capacity of these new units range from 4,000 tonnes crushed per day (tcd) to 8,000 tcd.

However, a Balrampur Group official denied that the new unit would be able to participate in this crushing season. Meanwhile, the total sugarcane acreage for 2008-09 has been estimated at 2.25 million hectares, down from 2.5 million hectares last year. This will result to shortfall in cane production.

The average sugarcane yield in UP is about 56 tonnes per hectare. The total production in 2008-09 crushing season is estimated at 126 million tonnes against 160 million tonnes last year. There are an estimated 4 million cane farmers in UP and the total requirement of all the operational sugar mills is pegged at 80 million tonnes.

The UP sugar sector is facing a three-pronged challenge of shortfall in the sugarcane production, litigation over cane payment and seasonal fluctuations of demand and supply.

Unless there is a marked improvement in the yield per hectare, the sugar mills in the state would find it difficult to get enough cane supply. Several reasons have been suggested for the drastic reduction in the area under cane crop this year, including the delay and confusion over sugarcane price to be paid by mills to farmers over the last couple of years.

"We are trying to increase area under sugarcane crop by coaxing farmers, who have stopped growing cane," a senior Birla Group official told Business Standard.

The Birla unit at Kushingar would also generate 30 Mw power and produce sugar for export. Of the total, 132 sugar mills, 17 are owned by the state sugar corporation, while 22 and 93 operate in the cooperatives and private sectors respectively.

In fact, the corporation owns a total of 33 mills "" of which 22 are in working condition and only 17 participated in the 2007-08 crushing season.

The government is pushing for the privatisation of the corporation sugar mills and invited Expression of Interests (EoIs) from the private parties till July 18, 2008.