Sugar output up 4% this season despite lower cane availability

Mills intensify closure on non-availability of cane; output for full sugar year ending Sept 2016 likely to be lower than last year

India’s sugar output rose marginally by four per cent so far this season, despite lower availability of cane in drought-hit Maharashtra.

Data compiled by the Indian Sugar Mills Association (Isma) showed India’s sugar output at 17.34 million tonnes (mt) as on February 15, 2016 compared to 16.72 mt in the corresponding period of last year.

The overall production of the sweetener is expected to remain lower at 27 mt this year against 28.3 mt a year ago.

“A total 472 sugar operational mills in the country produced 0.61 mt higher output this year than the last year. Of the 511 sugar mills that started crushing in 2015-16 sugar season, 39 have already closed their operations till February 15. By the same time last year, 11 mills had declared closure while 527 mills started crushing,” said Isma.

Maharashtra witnessed the largest number of mills declaring closure due to non-availability of cane this year. Of the 177 mills that started crushing of cane, 33 have declared production closure for this season by February 15, especially in the drought-prone districts of Maharashtra including Vidarbha, Marathwada etc. Mills in the state recorded total sugar output of 6.27 mt between October 1, 2015 and February 15, 2016 - a marginal 3.5 per cent lower than 6.5 million tonnes produced by the same time in the previous year.

Meanwhile, ex-mill sugar prices - which had fallen to the lowest in six years in the August-September period last year and started improving thereafter - have seen a fall in the past 15 days by a couple of rupees per kg.

As a consequence, repayment of loans taken by mills last year, such as  Scheme for Extending Financial Assistance to Sugar Undertakings, 2014 and soft loans for payment of cane price of 2014-15 sugar season, has started in February-March 2016. Considering mills’ high debt burden and repayment of other loans, most mills are facing difficulties in servicing the bank debts as well as in payment of cane price to farmers at the same time.

Isma said mills have dispatched around 1 mt of sugar for exports against 3.2 mt of quota fixed by the government. With a fall in the global prices, the pace of contracts for further exports has slowed down.