India's sugar output hits second highest record this year

India’s sugar production is estimated to surpass all previous estimates to set the second highest record at 28 million tonnes this year on the back of bumper cane output and extended season crushing. Sugar output in India had hit its highest at 28.36 million tonnes in 2006-07.

With nearly 25% of operating mills continuing crushing cane, sugar production in India was estimated at 27.37 million tonnes by the end of April. Of the 532 operational mills, 130 continued to remain in operation due to excess availability of cane in the region of their existence. Other mills have already declared closure for the season as availability of cane exhausts.

This year’s sugar output stands at 3.43 million tonnes, higher than 24.4 million tonnes reported in the last season. Cane arrears have already mounted to the alarmingly high level of Rs 21,000 crore. With additional production, however, arrears can swell further.

“Considering 130 sugar mills are currently in operation and pre-season crushing normally begins in Tamil Nadu, total sugar production may hit the second highest figure at 28 million tonnes this year. The sweetener is unlikely, however, to surpass the highest record set in 2006-07 at 28.36 million tonnes,” said Abinash Verma, Director General, Indian Sugar Mills Association (ISMA).

Meanwhile, sugar mills are worried over rising cane arrears as the amount due to farmers is required to be paid before the commencement of the next season. While the government has taken some initiatives in terms of raising import duty on raw sugar from the existing 25% to 40% in addition to 12.36% waiver in excise duty on ethanol.

The Food Ministry clarified that importers of raw sugar will have to re-export processed white sugar within six months. They cannot import any raw sugar for their export commitment. Also, waiver of the 12.36% excise duty on ethanol will help the mills get an extra Rs 5 a litre on sale to oil marketing companies (OMCs).

“We need immediate measures. The government’s measures would help industry in the long run. There is a much bigger crisis in hand right now, which the government should have focused on to solve immediately. There is a huge backlog of cane arrears dues in the current season, which needs to be cleared,” said Satnam Singh Behru, President, Consortium of Indian Farmers’ Association (CIFA).

Maharashtra achieved an all-time high record production of sugar at 10.35 million tonnes by April 30 this year as compared to 7.71 million tonnes during the same time last year. Mills in Uttar Pradesh reported a total sugar production at 7.02 million tonnes by April 30, 2015, as against 6.51 million tonnes produced during the same period last season.

“The government needs to build a buffer stock of at least 5 million tonnes which will enhance the industry cash flow and help clear farmers’ dues. Otherwise, sugar mills would be in dire strait with crushing to be difficult next season,” said a senior official of one of India’s largest sugar mills.