A collapse in molasses prices following a bumper production this year has become a bane for the sugar industry, which is still struggling to clear old stocks.
A collapse in molasses prices following a bumper production this year has become a bane for the sugar industry, which is still struggling to clear old stocks. With buyers quoting Rs 25-40 per quintal for molasses under free quota and Rs 5-10 per quintal for the product under levy quota, mills are being forced to hold on to the stocks. As a result, there is a severe shortage of storage.
Panic-stricken mills have started calling on the state government to take urgent remedial steps, as this has already started impacting the cane price payments to the farmers. The revenue generated from molasses is used in making cane price payments by the sugar mills.
According to industry insiders, buyers are manipulating the price. “If the tanks are not emptied and there is a situation of overflow then the mills will have no option but to suspend operations. Since molasses is an exciseable commodity, its wastage is a cognisable offence.
Some mills in the cooperative sector, which have lower storage capacities, have already started dumping fresh molasses in earthen pits. This has not only attracted the NGT’s adverse reactions but also led to the molasses losing its value, said an industrialist.
Till October 31, 2017, a total of 394.62 lakh quintal molasses was produced in the state while the closing stock was 59.12 lakh quintal. Out of the closing stock, 22.07 lakh quintal was reserved for the liquor industry which is yet to buy in such a high quantity. Besides, the open market un-lifted quantity is 36.93 lakh quintal.
The industry has been urging the government to decontrol molasses sale and encourage its outflow to other states, at least up to 50-60 lakh quintal. The other way out is to encourage production of ethanol.
The state government is yet to announce the new molasses policy, which is due from November 1, 2017.