Spot sugar prices rise by Rs 30-40 a quintal in three days as production pegged to be down 6.5 per cent.
Maharashtra has revised its sugar production estimates to 8.7 million tonnes (mt) from the earlier projection of 9.3 mt by the end of the current crushing season (2011-12). This was on account of a decline of at least 6 mt in sugarcane production, especially in western Maharashtra due to low rainfall. Maharashtra, which contributes over 30 per cent sugar to the national output, had earlier pegged sugarcane availability at 82.5 mt, but now the revised estimates show the actual availability would be 76.5-77.5 mt this season.
The state’s cooperation minister, Harshvardhan Patil, told Business Standard: “The state had earlier estimated rise in sugarcane production, at 82.5 mt, compared to 80.3 mt in 2010-11. The sugar production was estimated at 9.2-9.3 mt against 9 mt last year. However, the state may produce 8.7 mt only. This was because of low availability of cane.”
A senior official of the cooperation said sugar mills in Maharashtra are yet to commence crushing due to agitation by sugarcane farmer organisations. Even though the state government has held series of meetings with these trade unions, they have not reached an agreement over the payment of the first advance. About 175 mills, comprising 128 cooperative and 47 private mills, are expected to participate in the current crushing season compared to 164 which took part in 2010-11.
“One union is demanding payment of Rs 3,300 a tonne as first advance, while another union is demanding first advance payment of Rs 3,000 a tonne to sugarcane growers. This is well above the fair and remunerative price of Rs 1,375 a tonne fixed by a ministerial committee chaired by Chief Minister Prithviraj Chavan,” the official informed.
A senior member of the Federation of Cooperative Sugar Factories in Maharashtra, an apex body of over 170 cooperative units, hopes that unions and the government would arrive at an agreement so that mills could start crushing. “Low availability of sugarcane will affect the sugar production. However, we are in the process of collecting necessary data from the government as well as the mills,” he added.
Yogesh Pande, founder president of the Maharashtra Sugar Broker Association said, “A revised estimate in the production of sugar has already led to instability in the prices. Since the last two to three days, prices increased by Rs 30-40 a quintal. However, if there is a shortfall in production than expected, it will lead to spurt in sugar prices because traders are having no stock of sugar in hand. Traders are keeping a close watch on the market developments.” He informed the current ex-mill price of sugar is Rs 2,550 a quintal, below the cost of production of Rs 2,700 a quintal.
