Maharashtra sugar mills have incurred a loss of Rs 30 crore in the first month of the crushing season due to rising mismatch between the cost of production and ex-mill realisation from rapidly falling sugar prices. The Federation of Cooperative Sugar Factories in Maharashtra, a representative body of 200 mills, has projected a loss of Rs 1,000 crore by the end of the crushing season.
The Federation would take up the issue for discussion at its annual general meeting slated for December 26. It plans to seek the state government’s intervention. The government, which had revised production estimate to 8.7 million tonnes (mt) due to delay in commencement of crushing and shortfall in cane availability, has now said the state would produce 9.3 mt in view of the improved recovery.
In the current season, the recovery ranges between 10.1 and 11 per cent against 9.7 per cent during the same period last year.
A Federation official told Business Standard, “Falling sugar prices are a matter of serious concern. If prices do not recover, and if there is no proper realisation from exports, the mills will continue to incur losses. Against the cost of production of Rs 2,850 per quintal, the ex-mill realisation is Rs 2,685 per quintal. The gap is rising due to the dip in prices. If the situation deteriorates, it will be difficult for mills to repay loans and seek fresh ones ahead of the next season.”
He said mills would not be able to pay the first advance fixed between Rs 1,850 and 2,050 per tonne and the final payment to cane growers.
The official said the agency would demand a grant of Rs 1,000 per tonne for sugar exports from the state government and a recovery of sugarcane purchase tax at Rs 40 per tonne.
Vaibhav Naikwadi, chairman of the Hutatma cooperative sugar factory in Sangli district, said mills were sailing through rough weather. He made a strong pitch for fixation of a minimum support price for sugar. “It is high time the central government de-control the sugar industry and thereby give a free hand to millers,” he said.
Further, he appealed to the Centre not to announce increased non-levy sugar quota in such a volatile market.
A chairman of another cooperative factory informed that 75 per cent of sugar sold in the open market was not yet lifted and half of the quota of non-levy sugar remains unsold.
Further, traders were offering lower and lower quotes. Sugar trader Himmat Asbe said most traders were unable to lift sugar in the stipulated time frame. “If the state government does not intervene, another fall of Rs 100-200 cannot be ruled out in prices, as there is a time frame for millers to sell and dispatch each month. He added The recently announced sugar exports of 1 mt will not help millers, since previous export obligations are not yet completed and in many cases, exporters have backed out for one or the other reason.”
