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In a bid to reduce their losses, sugar mills in Uttar Pradesh are planning to advance the closure of cane crushing by a month. Experts believe this would save 10-15 per cent of mills’ operational cost for the season.
Normally, mills declare closure of crushing by April 15. In case of higher cane availability, they run till April 30 or even later. The intention, however, is to declare closure by March 15 in at least some centres, and crushing is being hastened to enable this. According to the Indian Sugar Mills Association (Isma), 118 operational mills in UP produced 4.23 million tonnes of sugar by February 15. By the same time last year, 119 operational mills produced 3.57 mt. This means, with a less number of mills, sugar production in Uttar Pradesh was reported higher by 19 per cent this season.
“Cane availability will exhaust in some regions of UP by March 15. Hence, mills' closure will be earlier this year,” said Abinash Verma, director-general of Isma.
With an estimated six to eight per cent decline in cane availability, sugar output in UP was initially estimated to decline by eight per cent to six mt this year as against 6.5 mt in the 2013-14 season. The latest estimates show a slight improvement in recovery from crushing, meaning the output would be about the same as last year. “Lower cane availability and a high crush rate will advance the crushing season,” said an official.
There are reports that farmers have diverted cane to animal feed and jaggery units, which pay on the spot. The alternative is an uncertain wait, in a background of high payment arrears to cane farmers from mills. Isma says these were Rs 12,300 crore by February 15, due to mills' inability to pay cane at even the central government's Fair and Remunerative Price at Rs 240 a quintal. UP's cane rate, set by the state government, is higher.
In Maharashtra, 178 operational sugar mills crushed 65.86 mt of cane to produce 7.28 mt of sugar so far this season. By February 27 last year, 146 mills had crushed 50.09 mt to produce 5.55 mt of sugar. As against 7.7 mt of output last year, sugar production in Maharashtra is estimated at 9.5 mt. Crushing is set to run for the full season, says R G Mane, secretary of the Maharashtra State Federation of Cooperative Sugar Factories.
However, cane payment arrears in Maharashtra are around Rs 1,500 crore.
Isma says mills in UP and Maharashtra, the two biggest producers, have been losing around Rs 6.50 a kg, due to sustained low realisation for sugar and a higher cost of production, due to elevated cane prices.
