Sugar mills sitting on huge inventory of 8.5 mn tonnes: ISMA

Stock pile up may spell trouble for sector, says industry body, seeks govt support and rationalisation of cane prices

 

Sugar mills have begun the 2013-14 marketing year, that started this month, with an opening stock of 8.5 million tonnes and this huge inventory could spell trouble for the sector, according to industry body ISMA.
    
In 2012-13 marketing year (October-September), mills had an opening stock of 6.2 million tonnes, sufficient to meet three months' demand.
    
"We have the opening stock of sugar of about 8.5 million tonnes, higher than last year. The production estimate for 2013-14 is also more than the demand," Indian Sugar Mills Association (ISMA) Director General Abinash Verma said.
    
"It will be a difficult situation for the industry unless there is support from the state, central governments and rationalisation of sugarcane pricing," he added.
    
Ex-factory prices of sugar are currently lower than the last year's level, he said, adding that banks are reluctant to give loans to Uttar Pradesh-based mills unless there is linkage between cane and sugar prices.
    
Verma feared that sugarcane arrears to farmers will increase substantially from the current outstanding of about Rs 3,000 crore in the absence of government support. Maximum arrears pertain to Uttar Pradesh, the second biggest sugar producing state in the country.
    
ISMA has pegged sugar production in 2013-14 at 25 million tonnes as against the annual demand of 23.5 million tonnes.
    
With likely surplus production this year, mills will have to focus on exports, said Verma.
    
Asked about crushing operation, Verma said mills in Uttar Pradesh will start after the announcement of state advisory price (SAP) for this year.
    
In Maharashtra, the country's largest sugar producing state, mills are expected to begin crushing operations by the end of this month.
    
The Centre has fixed a fair and remunerative price of sugarcane at Rs 210 per quintal for 2013-14 marketing year.
    
Last year, the country produced 25.1 million tonnes of sugar and imported 0.75 million tonnes, taking the total availability of sweetener to 25.85 million tonnes. The demand was about 23 million tonnes and exports were 0.35 million tonnes.