Delayed cane crushing might mean 15% less output

The unprecedented delay in commencement of cane crushing is likely to lower sugar output by 15 per cent in Uttar Pradesh this season. There is also damage caused by the recent Hudhud cyclone.

With 6.5 million tonnes (mt), Uttar Pradesh was second only after Maharashtra in sugar production for 2013-14. However, sustained selling below cost has impacted mills’ economic health and. So, sugar mills in the state decided not to commence operations for the 2014-15 season without a resolution of this and related issues.

“The state machinery is still working on the assessment of damage caused by the recent cyclone, which will be known only after three weeks. But, it is for sure that the crop damage, along with the delay in commencement of crushing, will affect sugar output this year,” said Deepak Guptara, secretary, UP Sugar Mills Association.

A senior executive at one of state’s largest sugar mills had estimated the output loss at a minimum of 15 per cent this year. This means the country’s production is likely to remain around 23.5 mt, similar to consumption and around a million tonnes lower than last year’s output.

Since the UP government had agreed to a grant of Rs 6 a kg to mills (the industry wanted Rs 9 a kg), in addition to assurance of help in raising working capital from banks for the current season, the mills’ association has decided to commence maintenance work in their factories, prior to resumption of cane crushing.

Assuming all factories will complete maintenance work in four to six weeks, at least another two weeks would be required for raising working capital and to fire their boilers. “Crushing can start by mid-December,” said Sanjay Tapriya, chief financial officer of Simbhaoli Sugar Mills.

This means crushing will be delayed by around 10 weeks from the normal of October 1-6.

“Mills can start crushing in the first week of December, provided the government agrees to a formula linking cane prices with realisation for sugar,” said Abinash Verma, Director General, Indian Sugar Mills Association. The government has given an assurance of arriving at such a formulation.

“Farmers have started distress sale of cane to jaggery units (kolhus) and khandsari producers, with an average recovery of six per cent as against the average sugar recovery of 9.7 per cent. The crop diversion will affect sugar output in the state,” said a senior official with one of the largest mills.

Normally, farmers await until the second week of November for mills to procure cane. This time, they want to clear their fields by the first week of December for wheat sowing, to take advantage of the soil moisture due to late monsoon rainfall.