Sugar production falls 35% to 4.5 million tonnes due to delayed crushing

Sugar export contracts worth 2 MT firmed up by domestic mills

Delayed sugarcane crushing in Maharashtra continues to cast its shadow on the domestic sugar production, which fell by 35 per cent to 4.58 million tonnes (MT) in the ongoing sugar season till December 15, 2019, compared to the corresponding period last year.

Against a total output of 4.58 MT by 406 mills in India this season, 473 sugar mills had produced 7.05 MT of the sweetener by this time during the 2018-19 cycle, according to Indian Sugar Mills Association (ISMA) today.

Maharashtra, the country’s second largest sugar producer after Uttar Pradesh, witnessed inordinate delay in the start of crushing operations owing to the inundated fields in major cane growing areas following heavy rainfall and floods, apart from state elections. The crushing could gain momentum only in the fourth week of November this year.

In Maharashtra, 124 mills have produced 766,000 tonnes, which is only 25 per cent of the 2.9 MT of sugar output logged by 178 units last year.

Meanwhile, ISMA director general Abinash Verma told Business Standard the domestic sugar mills had so far contracted for exports worth 2 MT for the current season. The major offshore destinations for Indian sugar are Iran, Sri Lanka, Afghanistan, African countries etc. He noted if the global sugar market matrix was favourable, there was a potential for sugar exports totalling 5 MT this season.

In UP, 119 mills produced 2.13 MT of sugar till December 15 compared to 116 units producing 1.9 MT in the corresponding period. UP is estimated to produce 12 MT of sugar or 45 per cent of the country’s estimated output in 2019-20 pegged at 33 MT.

Meanwhile, 63 mills in India’s third largest sugar producer Karnataka have produced 1.06 MT, nearly 332,000 tonnes less compared to the corresponding period last season.

In Gujarat, 15 mills are operational and have produced 152,000 tonnes of sugar till December 15, compared to 16 mills generating 310,000 tonnes last year.

In Andhra Pradesh and Telangana, only 14 mills have been able to start crushing so far and have produced 30,000 tonnes of sugar. Last year 18 mills were in operation and clocked 105,000 tonnes of output.

In Tamil Nadu, six mills are in operation producing 73,000 tonnes compared to 87,000 tonnes produced by 16 sugar mills last year.

In Bihar, Punjab, Haryana and Madhya Pradesh, 9, 16, 13 and 19 sugar mills are in operation, respectively, and have produced 135,000 tonnes, 75,000 tonnes, 65,000 tonnes and 35,000 tonnes, respectively, so far.

Against the two tenders floated by oil marketing companies (OMC) for ethanol procurement during Ethanol Supply Year (Dec 2019–Nov 2020), mills and standalone distilleries have offered to supply 1630 million litres (ML) of ethanol, of which 103.8 ML will come from cane juice, 625.8 ML from ‘B’ heavy molasses, 863.9 ML from ‘C’ heavy molasses and 37.8 ML from damaged food grain.

The supply of 730 ML of ethanol from cane juice and ‘B’ heavy molasses is double of what was supplied in ESY 2018-19. As such, the diversion of sugar into ethanol is higher. There is another tender expected shortly from the OMCs, against which more quantities of ethanol are expected to be offered to the OMCs for 2019-20 ESY.

However, the negative impact on sugar production owing to ethanol diversion during the entire season will be limited to nearly 850,000 tonnes only, Verma claimed.