Sugar output seen up at 17.5 mt

The ex-factory prices of sugar are expected to remain between Rs 17.5 and Rs 18.5 per kg. For consumers, the prices will be around Rs 21 a kg in the crop year 2005-06.

"Prices may not ease for retail customers this year and there will be no spectacular hike in onion and potato prices as the closing stocks are at about 4.5 million tonne (mt). Last year the closing stock stood at 8.5 mt," said B J Maheshwari,company secretary and assistant VP (taxation), Dwarikesh Sugar Industries.

This year total sugar output may go up to 17.5 mt against 12.5 mt last year and 14 mt in 2003-04. So, the country has sufficient domestic sugar supply.

Despite self sufficiency, India may import about 1.5 mt brown sugar and white sugar-free cubes against with 2 mt last year and 0.55 mt in 2003-04. Sugar mills are expanding their capacities voluminously and a number of greenfield and brownfield expansions are being set up by major sugar mills in the country.

Area under sugarcane cultivation is estimated to go up to 4.13 million hectare this year as compared to 3.75 million hectare last year and 3.99 million hectare in 2003-04. A major part of sugarcane output is used for sugar production in India with khandsari, jaggery and juice manufacturing using only 10 per cent of the total output.

The country had around 453 big and small sugar factories in 2002-03, which came down to 423 in 2003-04 and to 398 in 2004-05.

The number may come down further to 375 this year.

"Every year some factories become financially unviable because of huge loan or failure to pay farmers for their sugarcane supplies. But, those who have good relations with farmers and better payment track record survive," said Maheshwari.

Dwarikesh Sugar Industries has recently expanded its greenfield capacity of sugar production by around 5500 TCD, which will be expanded further to 7500 TCD and co-generation capacity of 9MW in Uttar Pradesh with a good recovery rate of 10.23 per cent as against the UP and Maharashtra recovery rates of 9.79 per cent and 10.40 per cent respectively. The commercial production is expected to start on December 11.