Initial euphoria over India surpassing last year?s sugar production based on increased availability of cane seems to be slightly premature, especially in Uttar Pradesh, the country?s leading sugarcane producing state, as almost 4,000 supervisors and cane development inspectors, who conduct a joint survey of the cane area in the state along with the industry, have been pressed into census duty.
While the figures of a 15-20% increase in area of sugarcane cultivation are strongly doing the rounds, the fact is that actual figures of how much sugarcane has actually been sown by the farmers this year will not be clear till the end of September.
The process of surveying, which generally starts in April and ends by June, will now start in August and actual data on the area under cane cultivation will be available at the end of September.
The result of this delay and therefore superficial estimations made on hearsay is expected to play spoilsport for the industry, which is still reeling under the impact of the wrong estimation of the cane availability last year. Since there were initial reports that cane availability will be low, it was believed that sugar production would be 4 million tonne only.
And as a result of this, the millers did their best to outdo each other in buying the maximum sugarcane for themselves, despite the fact that the state government had fixed the state advisory price (SAP) of sugarcane at Rs 165 a tonne.
The fear of not getting enough cane to run their factories was so dominant that the millers ended up paying the farmers whatever price they were asking for the cane. In fact, the 2009-10 season saw far too many price rises for cane, and at times the rise was on a weekly or fortnightly basis. In fact, on an average the price of sugarcane fluctuated between astronomical levels of Rs 250-Rs 280 a tonne.
As production of cane gradually edged up, it not only jacked up the cane price, but the surplus sugarcane forced the millers to operate the factories for a longer period, thereby resulting in losses.
?Unless the cane area survey results come in, it would also not be possible for the state government to either fix the SAP or to issue cane reservation area to the different mills, which is usually in early October,? said a cane department official, requesting anonymity.
It may be mentioned that last year?s initial estimates were that sugar production would be as low as 4 million tonne but in the end, the season ended with UP producing 5.6 million tonne. Initial estimates for this year are an increase of about 15-20% over and above last year.
This assumption is based on the fact that since the farmers got better a price for sugarcane last year, this may have influenced them into sowing cane on an increased area this year.