The country’s sugar production rose 56% up to November 30 in the marketing year that started in October from a year before, mainly on higher output in Maharashtra and Uttar Pradesh, according to the first set of actual output data this season compiled by the Indian Sugar Mills Association (Isma).
Output hit 1.78 million tonne as of November 30, compared with 1.14 million tonne a year before, showed the data. As many as 297 sugar mills have started cane crushing this year — against 262 a year before — while roughly 200 mills have to yet start operations. However, the pace of growth in production, compared with 2013-14, will narrow in the coming days as production by major mills — especially in UP — had picked up only in December last year.
The food ministry has projected a 4% rise in production for the entire 2014-15 to 25.50 million tonne, while Isma has forecast output in the range of 25-25.50 million tonne. Higher production in 2014-15 will mark a fifth straight year of surplus stocks for the world’s second-largest producer and biggest consumer. Domestic demand is expected to be a maximum of 24.50 million tonne this year.
The Isma data showed higher production up to end-November was aided by a better crop in Maharashtra this year and the relatively early resolution of a deadlock in UP as the state government announced some incentives after mills had refused to start crushing unless the state government firmed up a cane pricing formula and also offered all the promised incentives for last year.
In 2013-14, crushing by major mills in UP could be started only in December due to a delay in a settlement between them and the state government under which the state promised some incentives to lighten the burden for high raw material prices fixed by it.
As of November 30 in UP, 60 of the 124 sugar mills and co-operatives started crushing, compared with just 24 (mainly state-run mills and co-operatives with limited capacity) a year before. Consequently, 1,20,000 tonne of sugar was produced as of November 30, compared with just 12,000 in the same period last year.
In Karnataka, 3,36,000 tonne of sugar was produced by November 30, marginally higher than 3,28,000 tonne a year earlier. Only 31 mills started crushing in the state, against 54 a year before.
“However, it is important to note that in view of the problems being faced by several sugar mills in Karnataka regarding cane price payment to the farmers for the 2013-14 season, which had arisen due to adverse judgment from the Karnataka High Court, some sugar mills which had started their crushing operations had shut down their factories for some time and, therefore, the number of factories under operations as of November 30 is lower,” Isma said in a statement.
However, with the Karnataka government intervening in the matter, the sugar mills have reportedly started their crushing operations thereafter, it added.
The opening stocks of 2014-15 were to the tune of 7.5 million tonne, down from 9.3 million tonne a year before, mainly due to exports of raw sugar. However, stocks are still enough to keep domestic sugar prices subdued even when raw material prices have been rising consistently.