Maharashtra expects record cane output, surpassing previous high of 2006-07

Maharashtra’s cane availability and sugar production estimates are showing upward revision, thanks to 122 per cent more than the average rainfall in August and September in the major sugarcane catchment area. However, due to excess rain, the start of the crushing season is likely to be delayed by two weeks, till mid-October.

According to the revised estimate by the state government and Federation of Cooperative Sugar Factories in Maharashtra, 82.5 million tonnes of cane would be crushed, against the original estimate of 75 mt. Similarly, the state would produce 9.5 mt of sugar against 8.6 mt estimated earlier. The largest until now was in 2006-07, when the state had crushed 79.8 mt cane to produce 9.1 mt sugar.

In line with Maharashtra, industry sources said there are similar reports of extended rainfall and better cane health in UP, Karnataka, TN, Gujarat and AP. The present estimate of national production at 23 mt is bound to increase to 25-26 mt, much more than the country needs for domestic consumption.

Prakash Naiknavare, managing director of the Federation of Cooperative Sugar Factories in Maharashtra, told Business Standard, “The prolonged monsoon has drenched the fields, thereby making these unsuitable for manual operations of cutting and harvesting. As a result, the cane will continue to stand in the fields for a longer period, gaining more weight and accumulating more sugar. Thus the delay is a blessing for farmers, as his weight based payment will be higher while the industry will get the advantage of improved recovery.”

However, Naiknavare said unless the Centre allows exports in time, this additional production is bound to pressurise sugar prices, which are already below the production cost (ex-mill realisation is Rs 2,450 per quintal against the average production cost of Rs 2,700 per qtl). Currently, sale of each quintal of sugar is resulting in a cash loss of Rs 250.

At present, the Centre is cautiously proceeding in allowing exports. As a first step, it has permitted earlier export obligations to be completed. However, industry sources argued that general exports need to be allowed. The prices, they say, are attractive.

A Mumbai-based analyst, who did not want to be named, said: “India is geographically located to cater to the requirement of Pakistan, Sri Lanka, Bangladesh and Nepal on white sugar, while raw sugar can go to China and Russia at these attractive prices.

The more the quantity that goes out, it will reduce the pressure on domestic sugar prices, thereby helping the cane price to remain stable. This will result in the cane area not drastically going down (next season).”