Cane crushing gets into top gear

Maharashtra is leaving no stone unturned to crush all cane this sugar year (October - September). Last year, the state government had to cough up Rs 131 crore to compensate farmers for uncrushed cane spread across 52,400 hectares at Rs 25,000 a hectare.

This season, the government had instructed all sugar mills to start crushing from October 1, and a majority of them have started the process.

Of the 182 sugar crushing units registered with the Maharashtra government, 60-65 units started crushing on the first week of October. Currently, around 112 mills are running in full swing and, according to government sources, about 15-20 are awaiting government clearances to start the season by December 15.

"We will have no standing crop this year, if the season goes as per the plan," said Rajgopal Deora, the sugar commissioner of Maharashtra.

The government is also not expecting any arrears in payment to farmers as mills have agreed to pay 40 per cent of the estimated crop while sowing and for crop maintenance, with 40 per cent more to be paid at the time of harvesting. The remaining 20 per cent will be paid after selling the sugar.

This is unlike Uttar Pradesh where every step of production, from sowing and harvesting to transportation and unloading, is controlled by farmers themselves.

Despite the low price of sugar at Rs 12 per kg, compared with the cost of production (Rs 16 per kg), the crushing mills in Maharastra have managed to keep their arrears to Rs 135 crore compared with Rs 2,600 crore in Uttar Pradesh.

All claims for subsidies by mills would be settled as and when they come, Deora said.

Early this year, the government had leased 19 sick units. These units are awaiting government clearances to start crushing.

This year, Maharashtra is expected to produce 90-92 lakh tonnes of sugar after crushing 840 lakh tonnes of cane, with an expected recovery rate of 11.7 per cent.

Last year, 142 mills crushed a record 798 lakh tonnes of cane to produce 91 lakh tonnes of sugar, breaking the previous record of 576 lakh tonnes in 2000-01.

Mills in Maharashtra have recorded a short margin of Rs 600 crore because of low sugar prices and high production costs. A short margin is the difference between the amount banks release to sugar mills before the season starts and the total value of the production.

These mills, however, were hoping for a revival in their fortunes this season, said Prakash Naiknavare, managing director, Maharashtra State Cooperative Sugar Factories Federation.

With global sugar prices touching new lows, domestic players are finding it difficult to break even. The Central government has already raised its buffer stock limit and offered subsidies for exports to ease the plight of sugar producers in the country.

India is facing a sugar glut following a record harvest of more than 30 million tonnes last year. Annual domestic demand stands at only 20 million tonnes.

During the current season, the country's sugar production is likely to touch 32-33 million tonnes.