The fall in output can primarily be attributed to lesser number of functioning mills. Last year, while 84 mills were crushing sugarcane, only 78 mills started crushing operatioins this year till November 26.
There are 124 sugar mills in Uttar Pradesh, of which 78 have started operations. Of these 78 mills, 65 are privately owned and 13 are run by the Uttar Pradesh State Sugar Cooperative Federation.
According to industry experts, of these 78 mills, half of them have started operations last week and it takes a few days for the mills to stabilise production. The factory owners are in no hurry to start crushing operations as the sugar recovery improves only if the cane matures properly. Farmers, on other hand, were also waiting for the festive season to get over before they get down to the harvesting business. Now, the business is expected to pick up, said Sudhir Panwar, a farmer leader and professor of Lucknow University.
However, flip side of this delay for the industry, feel others, is the probabity that cane may get diverted to the unorganised sector. The unorganised sector, comprising of kolhus, crushers and khandsari units usually take advantage of the delay in announcing cane price. And for all those farmers who are unable to wait longer for the mills to start operations and are in desperate need of money, the only option is to go to these units and sell their crop at a lower price, said a source in the industry requesting anonymity.
While the incidence of diversion is less this year as farmers are expecting SAP in the region of Rs 300, crushers and kolhus are offering only R180-220 for every quintal of cane. Last year, the drawal by the gur and juice segment was 45% as they started early in October, while sugar mills started crushing in November. This year, too, the competition between sugar mills and gur and khandsari units will be stiff, with each wanting to eat into the others pie. Already these cottage units have pledged sugarcane growers an instant payment of Rs 180-220 per quintal, while mill owners are waiting for the state government to declare the state advised price (SAP)," said a source.
By starting late, millers are unnecessarily allowing the unorganised sector to make inroads into cane availabilty. As it is, none of the mills have enough cane to last them the entire season and most of the time they are running the mills on around 70% capacity only due to shortage of cane, said the source.