With the Centre finally allowing sugar export of 5 lakh tonne and the possibility of yet another such tranche being given a nod in the future, experts fear that sugar prices will shoot up and there would also be scarcity of the sweetner in the country. Especially so with the country?s second largest sugar producing state, Uttar Pradesh is set to close the current crushing season far below the 7 million tonne estimated at the beginning of the season.
This figure was later tapered down to 6 million tonne, but with sugarcane stocks fast depleting and over 50 sugar factories out of the total 125 in the state already closed for this season, officials in the sugarcane department feel that the final sugar production figure in the state will stand close to 5.6 million tonne.
?Of the remaining 75 mills that are still functional, most are running at very low capacities as there is very little sugarcane left to crush. As a result, most of the mills will either close by the end of March or by the first week of April,? said an official.
According to figures available till closing time Tuesday, as many as 48 sugar mills had closed and 5.51 million tonne sugar had been produced. This is better than last year?s production of 4.75 million tonne sugar till March 22. After taking into account the quantum of sugarcane still available for crushing, we estimate than the final sugar production figures in UP will be around 5.6 million tonne,? said an official of the cane department, requesting anonymity.
According to experts, Uttar Pradesh is not the only state to be worried over missing output estimates, The country?s largest sugar producing state, Maharashtra is also likely to miss the target by around 5 lakh tonne. ?Late rains and low yield in UP are the main reasons for the dip in production. The silver lining in this year?s scenario is that there was a 15% increase in cane area and the recovery, too, is marginally higher than last year. Despite the rains and low yield, we have not done extremely bad only because the area was much bigger than last year and the recovery has shown a slight improvement from 9.04 last year to 9.09 this year,? said the official.
?The country is expected to produce around 24.5 million tonne sugar, which in addition to the 5 million tones of carry forward stock, is expected to be comfortable. But with the consumption also likely to grow from the 22 million tonne last year to around 24 million tonne, the situation could get slightly tight for the country, especially if we are considering yet another tranche of exports. Though the industry is vehemently pursuing that goal as it would allow higher liquidity to the industry and facilitate early clearing of cane payment arrears to farmers, it might push up sugar prices, making it costlier for the common man,? feel experts.
Ending on a cautious note he said that he hoped that the situation does not reverse next year, ?wherein we may have to import sugar from outside?.