Karnataka sugar mills target 5 lakh tonne exports

Armed with a surplus of over 5 lakh tonnes of sugar this year, mills in Karnataka have set a target to export 5 lakh metric tonnes. The state is likely to end the present sugar year (October 2006 to Sept 2007) with a total production of 25 lakh tonnes, a growth of 31.5 per cent over last year.

"Unless we export the surplus production this year, we will not be able to recover a part of the losses that we will suffer. We are facing a state of glut this season and only the export of excess stock will save us from a severe situation," sources in the South Indian Sugar Mills Association said.

According to them, already mills in the state are facing a loss of Rs 300 per quintal as the prices are ruling at Rs 1,200-1,250 per quintal as against the production cost of Rs 1,550-1,600 per quintal.

The sugar industry in Karnataka is going through a critical phase, consequent to higher planting and the poor off-take for jaggery production. Factories will be forced to continue in the summer months with low recovery.

The factories will be left with an excess stock of nearly one million tonnes sugar in the state by the end of the present season on September 30. The state does not need this much of stock as its monthly allocation is in the order of 1-1.25 lakh tonnes allotted by the Centre. Hence, the excess stock will be available for exports, the sources said.

To add to the misery of the sugar industry this year, the factories in southern parts of the state will commence their production for the next sugar season by July itself as there is an availability of excess cane. This year the cane production has gone up by 76 per cent in Karnataka to 300 lakh tonnes. Of this, 230 lakh tonnes will be available for crushing, while the remaining 70 lakh tonne will go for seed purpose and jaggery making.

Factories had requested the state government to take some relief measures like the waiver of purchase tax, incentives for late season crushing and subsidy for the export of sugar. However, the state government is yet to take a decision in this regard.

The sugar factories in the state had decided to stop crushing operations from April 1 protesting negligence on the part of the state government to announce any relief measures. They have now deferred the protest by 15 days following the Centre announcing some incentives for the units. The state too has promised to consider their demands, the sources told Business Standard.

Meanwhile, the sugar factories are also finding it difficulty to find an export market for their produce.

As the prices in the international market are also at a low level this year, the factories may find very less buyers globally, the sources said. Presently, the prices in the international market are ruling at $300-305 per tonne.