50% cane supply assurance likely to be made a must for factories.
The Maharashtra government is contemplating tightening licensing norms for sugar factories. The move, say industry experts, may leave 25-30 per cent co-operative mills in the state without work in the coming sugar season (October 2009-September 2010).
According to a senior industry official, the state government is considering refusal of crushing licences to mills that have cane supply assurances of less than 50 per cent of their capacity. The mills will have to give an assurance to the government to this effect.
| FACT FILE | ||
| Particulars | 2007-08 | 2008-09 |
| Number of factories installed | 192.00 | 193.00 |
| Number of factories licensed for crushing | 173.00 | 144.00 |
| Cane crushed (million tonnes) | 76.19 | 39.90 |
| Sugar production (million tonnes) | 9.06 | 4.59 |
| Recovery (%) | 11.89 | 11.51 |
As corporate and contract farming are still to catch up in India, the mills will not be able to grow the crop. Therefore, experts do not rule out consolidation in sugar industry in Maharashtra, India’s second-largest sugar producer. A final decision on tightening licensing norms will be taken by the Ministers’ Committee, headed by the Chief Minister, early next month.
Industry watchers say the proposal may lead to a “price war” due to shortage of cane. Last year, 144 (116 co-operatives and 28 private) out of 193 registered factories got licence for crushing as against 173 (146 co-operatives and 20 private) in the previous season. But many of these worked at less than half their capacity. The mills were forced to declare the end of the crushing season towards the end of February and early March, over 45 days before scheduled, due to shortage of cane.
Sugarcane output almost halved to 39.90 million tonnes in 2008-09 from a record 76.19 million tonnes in the previous season as farmers shifted to more remunerative crops, including pulses and cotton. As a consequence, hardly 7.87 lakh hectares were under cane. This is expected to rise to 8 lakh hectares in 2009-10.
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The state produced 4.6 million tonnes sugar with an average recovery of 11.51 per cent in the 2008-09 season. These figures were 9.06 million tonnes and 11.89 per cent in the previous year.
Meanwhile, the output of cane is likely to be affected badly due to the three-week delay in monsoon.