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SUGAR

As on December 31, 462 mills in India produce 80.90 lakh tons of sugar
Thursday, 05 January, 2017, 08 : 00 AM [IST]
Our Bureau, New Delhi
As on December 31, 2016, 462 sugar mills in the country produced 80.90 lakh tons of sugar, which is 0.4 per cent higher compared to last season’s production for the corresponding period.  In sugar season 2015-16, 481 sugar mills were in operation on December 31, 2015, and they had produced 80.56 lakh tons of sugar till that date.

In Maharashtra, 147 sugar mills commenced crushing operations. As was generally expected, 25 of the mills have stopped crushing. These mills are mostly in the drought-affected areas of Marathwada, Sholapur and Ahmednagar. As on December 31, 2016, 25.25 lakh tons of sugar were produced in the state as against 33.70 lakh tons produced during the corresponding period last season, when 169 mills were running. It is important to note that the mills in Kolhapur, Sangli, Satara and Pune, which were not as adversely impacted by drought, are crushing at almost similar levels like last year.  The mills in these four regions generally contribute for almost 55-60 per cent of Maharashtra’s production.

Barring some sugar mills in the Marathwada and Solapur regions, where sugar recovery during the current season was low as compared to last season, the sugar recovery percentage till December 31, 2016 was 10.52 per cent as against 10.43 per cent as on same date last year.

In Uttar Pradesh, 116 sugar mills are in operation, and they have crushed 278 lac tons of sugarcane and produced 27.40 lac tons as on December 31, 2016, with an average recovery of 9.86 per cent.  Last year (i.e. in sugar season 2015-16), 113 sugar mills were in operation on December 31, 2015, and they crushed around 178 lakh tons of cane to produce 17.97 lakh tons of sugar at an average recovery of 10 per cent.  Sugar production this year in Uttar Pradesh is higher by 52 per cent as compared to the same time last year.

Fifty-six sugar mills in Karnataka are in operation on December 31, 2016, who have produced 15.60 lakh tons of sugar, as compared to 15.94 lakh tons produced by 63 sugar mills in sugar season 2015-16 on December 31, 2015.  As was expected, five mills have shut down operations in Karnataka on December 31, 2016.  As compared to 40.5 lakh tons produced by Karnataka in last season, the Indian Sugar Mills Association (ISMA) expects 31 lakh tons of sugar to be produced in the state this year.   

In Gujarat, 20 sugar mills are operating during sugar season 2016-17, and they have produced 3.50 lakh tons of sugar till December 31, 2016.  In sugar season 2015-16, 19 sugar mills were in operation on December 31, 2015, which had produced 4.61 lakh tons of sugar till that date.

In Tamil Nadu, 25 sugar mills were in operation as on December 31, 2016 which have produced 1.25 lakh tons as compared to 1.01 lac tons of sugar production by 25 mills as on December 31, 2015.

In Andhra Pradesh and Telangana, 24 sugar mills produced 1.80 lakh tons of sugar till December 31, 2016 and this is 0.18 lakh tons less than the sugar produced by 25 mills in sugar season 2015-16 till December 31, 2015.  

Eleven mills in Bihar produced 1.50 lakh tons of sugar till December 31, 2016 as against 1.37 lakh tons produced by 11 mills in 2015-16 season as on December 31, 2015.  Similarly, 14 mills in Haryana, 16 in Punjab, 17 mills in Madhya Pradesh and Chhattisgarh and eight mills in Uttarakhand together produced 4.45 lakh tons, as compared to 3.85 lakh tons produced on the corresponding date last year.

As per information gathered from the main sugar belt of Maharashtra, viz. Kolhapur, Sangli and Satara, most of the sugar mills in these regions will continue their operations till the end of March 2017, whereas mills in Pune and Ahmednagar are likely to operate till late February 2017. The average sugar recovery achieved by the mills of Maharashtra so far is more or less the same as that of last year till December 2016. Early closures are mainly because of lower sugarcane production in some parts of Maharashtra, which was accounted for while estimating sugar production from the state in the current year.  

Ex-mill sugar prices, which dropped by Rs 2 to 3 per kg since the second week of November, 2016, have started improving and are now at the levels seen a couple of months ago.  These prices are just enough to cover the costs of production.

With lower offtake and sugar consumption in 2016-17, the sugar stocks at the end of the current season may be more than estimated earlier by 5-10 lakh tonnes. However, one needs to do more analysis to arrive at the figure of estimated consumption.  

ISMA will carry out its second advance estimate for sugar production in 2016-17, in late January 2017, which will be based on satellite images. Trend of yields and recoveries upto January 2017 would be considered. ISMA will review the same in its Committee Meeting on January 25, 2017, and release its second advance estimate for 2016-17 sugar production on that date.

With higher cane prices announced by the governments of states like Uttar Pradesh, Punjab and Haryana, low sugar recovery being achieved states like Tamil Nadu, Andhra Pradesh etc., and lower capacity utilisation in the drought-affected states like Maharashtra, Karnataka, Telangana, etc., the all-India average cost of production of sugar during the current sugar season (2016-17), will roughly be higher at around Rs 35 to 36 per kg (Rs 2 per kilo higher than the previous year’s cost of production).  

Sugar mills should be allowed to recover at least their costs during the current season, otherwise, they would not be in a position to make payments to farmers on time and would also not be in a position to repay the loans taken from the government of India including under the Scheme for Extending Financial Assistance to Sugar Undertakings (SEFASU) and soft loans, which are due to be repaid this year.

The first three months of the current season (i.e. October-December 2016) saw a big fall in the sugar offtake. With weddings and family celebrations being low-key, and consumption of sugar sweetened products like biscuits, chocolates, beverages, ice creams, etc. being lower due to the lower availability of currency, there has been a demand destruction of almost five lakh tonnes of sugar. The offtake in October-December 2016 has, therefore, been significantly lower than last year.

Therefore, the sugar consumption in sugar season 2016-17, earlier estimated to grow at two per cent over the last year, to 255 lakh tonnes, will be much lower. The offtake may thus be lower than even last year’s consumption of 248 lakh tonnes.
 
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