UP sugar mills to start crushing soon to recover losses

Despite uncertainties over cane pricing, sugar mills in Uttar Pradesh plan to commence crushing as early as possible, in order to avoid any recovery loss which may impact their operating performance.

Simbhaoli Sugars Ltd (SSL), the country’s second largest sugar refiner, started procuring cane last Wednesday for its two crushing units in the state, while others, including Bajaj Hindusthan, Balrampur Chini and Dwarikesh Sugars, have already fired their boilers. As a common practice, boilers are fired about a fortnight before the crushing begins.

SSL has offered the State Advised Price (SAP) of Rs 165 a quintal to farmers and assured them incentives in line with other mills. But, farmers may not settle for anything less than Rs 200 a quintal.

“This is not the right time to fix incentives due to the differences in farmers’ demand of Rs 280 a quintal and government’s fair and remunerative price (FRP) of Rs 129 a quintal. Still, we have assured farmers that our offerings will be in line with other mills,” said Sanjay Tapriya, chief financial officer of SSL.

Other sugar mills are also trying to resolve the issue of price differences to start crushing for the season. By any means, crushing is likely to run in full swing by November-end. Otherwise, recovery in the standing crop will start declining.

Average recovery in Uttar Pradesh stands below 10 per cent which may decline this year on adverse climate and untimely harvest. Cane below 9.5 per cent recovery is generally treated as unviable for sugar mills and therefore, supplied to jaggery and khandsari units.

Last year, almost all 550 sugar mills in the country operated at less than their installed capacity because of cane shortage.

Moreover, the country can not rely on import of raw sugar if it has to keep price under control. Therefore, options have to be explored to raise sugarcane yield to meet the annual demand of 23 million tonnes, as against the production of 14.7 million tonnes last year and the estimated 16 million tonnes this year.

Last year, India imported about 5 million tonnes of raw sugar, mainly from Brazil, which the industry feels is not a sustainable solution to the cane shortage issue.

Meanwhile, uncertainty over final cane price continues, as UP farmers are unwilling to supply sugarcane either at the SAP or the FRP. Last month, the Centre announced FRP to encourage farmers to bring additional area under cane cultivation, which was otherwise being diverted towards more remunerative crops such as wheat, paddy and cotton.

The Union Agriculture Minister Sharad Pawar also advised the mills to consider paying Rs 180 a quintal and to begin crushing as early as possible to ease supply of sugar in the country.