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Mills owe farmers Rs 15,000 cr for cane purchases

Mills owe farmers Rs 15,000 crore for cane purchases till March 31 this marketing year that started on October 1, although payments for the last season’s arrears

Mills owe farmers Rs 15,000 crore for cane purchases till March 31 this marketing year that started on October 1, although payments for the last season’s arrears are all but over, according to the data by the Indian Sugar Mills Association (ISMA).

Mills in Uttar Pradesh, the second-largest sugar producer, accounted for 70% of the total payments yet to be made for the cane purchases, while those in Karnataka made up 22%, the data showed. However, roughly Rs 6,900 crore have also been paid to farmers in Uttar Pradesh so far this year for cane purchases.

Earlier this year, sugar mills in UP expressed their inability to crush cane after banks refused to provide working capital loans to them, leading to a delay in crushing by a month.

They started crushing in December only after the UP government offered incentives worth Rs 11.03 per quintal and the Centre, too, pitched in with a promise to offer Rs 6,600 crore worth interest-free loans for the entire country.

Still, sugar production in the country dropped 6.9% through March this marketing year to 21.5 million tonnes due to the diversion of cane to other consuming industries following the delay in crushing as well as rough weather in key regions.

However, at 330, more mills were still crushing cane as of March 31, as 231 mills were undertaking such an operation in the same period last marketing year, the ISMA data showed.

Maharashtra produced 7.01 million tonnes of sugar, roughly 9% lower than a year before. As many as 85 mills are still crushing against 42 in the same period last year. As of March 31, total 621 lakh tonnes of sugarcane has been crushed with an average of 11.3% recovery as against 680 lakh tonnes with 11.34% recovery in last year.

Uttar Pradesh produced 5.8 million tonnes of sugar between October and March, compared to 6.7 million tonnes a year before, clearly showing the impact of the delay in crushing. However, the recovery is a tad better at 9.21% so far, compared to 9.12% a year earlier.

Karnataka produced 3.75 million tonnes of sugar, compared to 3.36 million tonnes last year. The year-on-year increase of 12% is because of better yields and good recovery. Andhra Pradesh witnessed an output of 9,40,000 tonnes as against 9,66,000 tonnes a year before, while Tamil Nadu produced 9,50,000 tonnes, about 28% less than a year before.

Last month, ISMA had forecast that the country’s sugar output could drop 5.3% in 2013-14, marking a second successive year of decline, mainly due to bad weather and a diversion of cane for use by jaggery makers.

Sugar output in the world’s largest consumer and second-biggest producer is likely to drop to 23.80 million tonnes in 2013-14, compared to 25.14 million tonnes a year before, it had said. Last August, ISMA forecast sugar production for 2013-14 at 25 million tonnes.

The estimates by ISMA, however, revealed that production level this year would still exceed an expected consumption of 23.5 million tonnes, keeping supplies steady. Still, the drop in output may slightly improve the realisation of mills, already running at huge losses, on sugar sales as they will be in a better position to cut the glut in the market following years of surplus production. The incentive for raw sugar production, to the tune of Rs 3,333 per tonne, announced by the government recently would also help.

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First published on: 03-04-2014 at 03:16 IST
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