Delayed crushing benefits sugar mills in UP

The month-long delay in crushing by sugar mills in Uttar Pradesh has benefited them with a better recovery rate and stable sugar prices.

Moreover, mills are crushing at an interim cane price (issued by the Allahabad High Court) of Rs 110 a quintal as against the state advised price (SAP) of Rs 125-130.

"Mills are expecting a higher recovery of 9.8 per cent this year against 9.3-9.4 per cent last year as the delay has helped better maturing of cane. If the trend continues for the whole season, the high cost of production will be partially offset," said Sanjay Tapriya, director (finance), Simbhaoli Sugars. The 9.8 per cent recovery means mills will produce 9.8 kg of sugar from each quintal of cane they will crush.

With the delay in crushing season, the arrival of new sugar has also got delayed. As a result, sugar prices had been maintained at the off-season level of Rs 1,375-1,400 a quintal, he added.

The delay was mainly due to the unwillingness of mills to run at SAP of Rs 125-130, since sugar prices have declined, leading to losses. On November 15, the Allahabad High Court set an interim price of Rs 110 a quintal following petitions by several sugar mills challenging the SAP.

C B Patodia, president of the UP Sugar Mills' Association and advisor to the Birla Group of Sugar Companies, said that sugar prices were stable due to wedding season demands, but added that prices would fall as and when the new sugar starts arriving in the market.

The delay, however, has badly hit the cane growers, who are dumping their cane with gur and khandsari units at a significantly low price of Rs 50-60 a quintal in a hurry to vacate their fields for sowing of wheat.