India's sugar output hits second highest record this year

Production surpasses 27.37 million tonne mark, 25% mills continue operations, cane arrears hit all-time high of Rs 21,000 cr

At 28 million tonnes (mt), India’s sugar production this year is estimated to exceed estimates, owing to a bumper cane output and an extended crushing season. The output is expected to be the second-highest ever, after 2006-07, when it was 28.36 mt.

“Considering 130 sugar mills are currently operational and pre-season crushing normally begins in Tamil Nadu, total production might hit the second-highest figure of 28 mt this year. It is, however, unlikely to surpass the record set in 2006-07,” said Abinash Verma, director general, Indian Sugar Mills Association.

At the end of April, production was estimated at 27.37 mt. Of the 532 operational mills, 130 continued to operate due to excess cane in their respective regions. Other mills have already declared closure for this season.

Cane arrears have already mounted to an alarming level of Rs 21,000 crore. With additional production, these could swell further. Mills are worried about the rising arrears, as dues to farmers have to be paid before the commencement of the next season. The government has taken some initiatives on this front, raising import duty on raw sugar from 25 per cent to 40 per cent and announcing a 12.36 per cent waiver in excise duty on ethanol. The excise duty waiver will help mills get an additional Rs 5 a litre on sale to oil marketing companies.

The food ministry has clarified importers of raw sugar will have to re-export processed white sugar within six months; they cannot import any raw sugar for their export commitment.

“The government’s measures would help the sector industry in the long run. We need immediate measures. There is a much bigger crisis at hand right now. The government should have focused on resolving this immediately. There is a huge backlog of cane arrears this season, which needs to be cleared,” said Satnam Singh Behru, president of the Consortium of Indian Farmers’ Associations.

By April 30, production in Maharashtra stood at 10.35 mt, an all-time high. For the year-ago period, it was 7.71 mt. Mills in Uttar Pradesh reported overall sugar production of 7.02 mt by April 30, against 6.51 mt a year earlier.

“The government needs to build a buffer stock of at least five mt, which will enhance industry cash flow and help clear dues to farmers. Otherwise, sugar mills will be in dire straits and crushing will be difficult next season,” said a senior official at one of the country’s largest sugar mills.