Sugar output estimate lowered

The sugar industry on Thursday lowered its production estimate for the current season (2007-08) from 33-34 million tonnes to 30-31 million tonnes.

"While the output is expected to be higher than 28 million tonnes in last season, it could be lower than the initial projection of 33-34 million tonnes owing to crushing delay and lower yields in certain parts caused by adverse weather conditions," said P Rama Babu, the outgoing president of Indian Sugar Mills' Association (ISMA).

The production is expected to fall significantly in the next season, beginning October 2008, as there will be a diversion of sugarcane area to other crops.

"However, the projected opening stock of 17-18 million tonnes at the start of next season will take care of the demand and price situation," said S L Jain, director-general, Indian Sugar Mills' Association.

Jain added that exports in the current season may reach 2.5 million tonnes from 1.7 million tonnes last season.

Ranjit Puri, who succeeds Rama Babu as ISMA president, said that there should be a link between sugarcane and sugar price (including byproducts), for which a mechanism should be devised.

Favouring the linking of sugarcane price with sugar realisation, Rama Babu said the government should follow the models of other leading producing countries and help farmers if the market-linked price of sugarcane falls below the statutory minimum price (SMP).

The government intervenes in crops like wheat, rice and pulses if the market price falls. "It is not justified to put the responsibility to help cane growers on the mills alone," he added.

Welcoming the government's decision to provide interest-free loans to sugar mills, ISMA said it would definitely help all companies including those in Uttar Pradesh to clear the cane arrears, which currently is estimated at Rs 2,000 crore. Jain said the mills in UP alone have an estimated arrears of Rs 1,000 crore.