Maharashtra sugar mills expect Rs 177 cr loss in Jan-Feb

The sugar industry in Maharashtra says it expects to lose Rs 177 crore in January and February. Reason: Widening gap between production cost and ex-mill realisation, non-lifting of stocks by traders and the Centre's decision to increase the levy-free quota (LFQ; also known as non-levy quota, meaning the amount mills may sell in the open market) for January and February.

This is also the time when crushing mills would have to pay committed prices for cane to farmers. So far, state mills have produced 45 million tonnes.

The Centre had announced a cumulative national LFQ of 1.7 mt for January 2011, 54.5 per cent more than that of January 2010. Similarly, the February LFQ of 1.62 mt is 35.2 per cent more than that of February 2010. In the case of Maharashtra, the largest producing state, the Centre announced an LFQ of 660,000 tonnes, compared to 360,000 tonnes in January last year.

Prakash Naiknavare, managing director of the Federation of Cooperative Sugar Factories in Maharashtra told Business Standard: “As there are no major festivals or any possibility of spurt in sugar consumption in these two months, the excess availability of LFQ sugar has put tremendous pressure on ex-mill sugar realisation, which has now plummeted to Rs 2,550 a quintal (without duty) which is Rs 150 per qtl below the average cost of production of Rs 2,700 a qtl.”

A state government official, who did not want to be named, recalled that at the high-powered committee meeting headed by cooperation minister Harshvardhan Patil, it was committed to release the first advance to farmers at Rs 1,850 a tonne for the Solapur, Ahmadnagar and Pune districts and at Rs 1,750 a tonne for Marathwada, Vidarbha and Khandesh regions. Prior to this, the sugar-rich Kolhapur, Sangli and Satara areas from western Maharashtra had already paid Rs 2,000-plus a tonne. The government official said a delegation led by the state cooperation minister would discuss this at a meeting here on Thursday between K V Thomas, the Union minister food, civil supplies and public distribution.