February 27, 2015
Sugaronline | http://goo.gl/bno7zH
In a bid to reduce losses, sugar mills in Uttar Pradesh are planning to advance closure of cane crushing by a month for the current season. Experts believe advancing closure by a month would save 10%-15% of mills' operational cost for the season, according to India's Business Standard newspaper.
Normally, mills declare closure of crushing activity with processing of the last cane by April 15. In case of higher cane availability, however, mills run by April 30 and even later. But, mills have speeded up crushing of sugarcane especially in Uttar Pradesh to declare closure by March 15 in a couple of centres in Uttar Pradesh.
"Cane will exhaust in the next 10-15 days. Hence, mills will have no option but to declare closure for the current season by March 15," said an industry official in the state.
According to the apex industry body Indian Sugar Mills Association (ISMA), 118 operational mills produced 4.23 million tonnes of sugar by February 15. By the same time last year, however, 119 operational mills produced 3.57 million tonnes of the sweetener. This means, with a less number of mills, sugar production in Uttar Pradesh was reported higher by 19% this season.
"Cane availability will exhaust in some regions of Uttar Pradesh by March 15. Hence, mills closure will be earlier this year," said Abinash Verma, Director General, ISMA.
With an estimated 6-8% decline in cane availability, sugar output in Uttar Pradesh was initially estimated to decline by 8% to 6 million tonnes this year as against 6.5 million tonnes reported during the last season i.e. 2013/14. But, the latest estimates showed a slight improvement in recovery resulting into an upward revision in the production estimated at similar to last year.
"Cane availability is 6-8% lower with higher crush rate this year. This means, crushing season should end early. But, sugar output will remain similar to last year. Therefore, lower cane availability and high crush rate will advance crushing season," said the official.
Sporadically, however, there are reports that farmers have diverted cane towards animal feed and jaggery units for getting spot payment rather than waiting for uncertain period with piling up cane arrears in the state. According to ISMA, total arrears stood at Rs 12300 crore by February 15 due to mills inability to pay cane rate at even the Fair and Remunerative Price (FRP) at Rs 240 a quintal.
In Maharashtra, however, 178 operational sugar mills crushed 65.86 million tonnes of cane to produce 7.28 million tonnes of sugar so far this season. By February 27 last year, 146 sugar mills had crushed 50.09 million tonnes of cane to produce 5.55 million tonnes of sugar. For the first time, sugar mills in Maharashtra have been facing arrears of around Rs 1500 crore.
As against 7.7 million tonnes of overall output last year, sugar production in Maharashtra is estimated at 9.5 million tonnes.
R G Mane, Secretary of Maharashtra State Federation of Co-operative Sugar Factories, sugar production in the state is estimated higher this year. Since, mills have been given mandate to crush last standing cane, crushing is set to run full season this year, he added.
ISMA revised sugar production upwards to 26 million tonnes this year as compared to its earlier estimate between 25 - 25.5 million tonnes and last year's output at 24.4 million tonnes.
Advancing the closure in Uttar Pradesh will save at least 10-15% of sugar mills' operating cost this season, said an analyst.
Sugar mills in Uttar Pradesh and Maharashtra have been losing around Rs 6.50 a kg due to sustained low realisation and higher cost of production on elevated cane prices.