The fortunes of sugar companies in Uttar Pradesh are set to see a revival with the shortest-ever crushing period in 15 years. Sugar mills in the state that began crushing late November have already started shutting down due to shortage of sugarcane supply.
The state government has projected an output of 7.6 million tonnes for the current season, 10.27 per cent less that last year’s production. Ex-factory sugar prices, that were ruling at Rs 1,375 a quintal when the mills began crushing, have recovered to Rs 1,500 on lower production estimates. Mills have incurred huge losses due to low prices.
“Mills have already began to shut down. This will be shortest crushing season in the last 15 years. Against an average crushing duration of 150 days in the past, this year’s average duration will be 120-140 days,” said CB Patodia, president, UP Sugar Mills Association and advisor, Birla Sugar.
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Mills delayed their crushing by a month due to their differences with the state government over sugarcane price. The delay forced many farmers to dump their sugarcane at jaggery units at throwaway prices to vacate fields for sowing of wheat. This led to diversion of sugarcane.
“Sugar mills, particularly those in Central UP, may start shutting down from March 15 onwards. Diversion of sugarcane to the jaggery units has affected sugarcane supplies to mills. These units began running in October, about a month before mills began and they continue to run. Moreover, new capacities have become operational, thereby affecting sugarcane availability. In some pockets, mills are running below capacity for the last few days,” says Rakesh Bhartia, chief executive officer, Bajaj Hindusthan, the country’s largest sugar producer.
Ajay and Vikram Shriram controlled DSCL has already shut operations at its Hariawan (district Hardoi) in central Uttar Pradesh as sugarcane supplies had reduced.
“There has been no rainfall in large parts of Uttar Pradesh in the last four months. This along with a high temperature has affected sugarcane availability,” says Ajay Shriram, vice-chairman and senior managing director.