Maharashtra govt to discuss help to sugar mills

Even as Maharashtra is expecting a bumper sugar production of 9.5 million tonnes in the current crushing season, surpassing its own record of 9.1 mt in 2006-07, the cooperative sugar industry expects a Rs 2,375-crore cash loss. The reason: A mismatch between the cost of production and realisation, the difference being around Rs 250 a quintal. The realisation is estimated at Rs 2,450 a qtl, as against the production cost of Rs 2,700 a qtl.

The industry said it incurred a cash loss of Rs 2,000 crore in the previous crushing season. Prakash Naiknavare, managing director of the Federation of Cooperative Sugar Factories in Maharashtra, told Business Standard: “The difference between the production cost and realisation is a major problem. On top of it, the farmers’ associations, especially the Shetkari Sanghatana, are forcefully demanding an exorbitantly high cane price.

This is going to severely hit the finances of the sugar mills.” Industry sources believe the state cabinet may tomorrow consider various incentives to help the mills. “The mills may consider storing raw sugar in 2010-11 and 2011-12, even bearing the interest burden of Rs 300 a qtl. However, they can make a fortune by refining this stock during the sugar deficit years of 2012-13 and 2013-14. The mills can also look at the possibility of ethanol production at a time oil marketing companies will procure it at Rs 27 a litre,” said a source. Naiknavare said the crushing season would be delayed by about a fortnight, till mid-October, due to heavy rain in August, September and October.

About 35 of the 150-odd cooperatives ignited their boilers on October 1. However, says Naiknavare, harvesting labourers will enter the fields only after October 15; they will first harvest the kharif bajra and then leave for cutting. The labourers come from the Beed and Osmanabad districts of the Marathwada region. A state government official said the government would give a transport subsidy of Rs 3 per tonne per km for encouraging transport of cane from far off places. “The idea is to ensure that cane does not remain uncrushed at the end of the season.

The state cabinet is expected to give its approval at the Wednesday’s meeting,” the official added. Traders have made a strong demand for re-start of sugar exports. Yogesh Pande, founding president of the Maharashtra Sugar Brokers Association, said: “The Centre must take steps to allow exports, which will provide stability to domestic sugar prices. The recent floods in Pakistan and other neighbouring nations have raised hopes of Indian millers since there will be a shortage of sugar in these countries.” He said India would be a major exporter due to the high prices in the global market ($600-650 a tonne).