Sugar output may drop 8% in 2015-16: Isma

By: | Published: January 23, 2016 1:48 AM

Industry body revises downwards the production estimate by 1 million tonne to 26 MT, citing deficient monsoon

India’s sugar production in the current marketing year through September could be 8% lower than a year before, the Indian Sugar Mills Association (Isma) said on Friday, trimming its earlier projections citing enhanced risks to yield from deficient monsoon in Maharashtra and Karnataka.

Sugar output in the world’s second-largest producer is expected to touch 26 million tonne (MT) in 2015-16, compared with 27 MT predicted in September last year and 28 MT forecast in July when the industry body had issued a quick estimate.

The latest estimate is lower than the actual output of 28.31 MT in 2014-15 when production had scaled an eight-year peak. Isma had earlier said sugar consumption in 2015-16 could be 25.2 MT, up marginally from a year before, suggesting production would still beat demand for a sixth straight year.

The average ex-mill sugar prices across states have improved a tad over the past few months and are hovering around R2,950 per quintal. However, the prices are still not enough to recover even the cost of production of R3,300-3,500 per quintal, Isma said.

“So it is feared that if the current ex-mill prices do not improve to allow them to cover their costs, there would be additional cane price arrears of farmers and defaults in repayment of bank loans. Cane price arrears of previous season as on today is around R2,500 crore,” said Isma director general Abinash Verma.

Earlier this season, sugar prices were ruling at over seven-year lows, having dropped below even cane costs and stressed mills’ balance sheets immensely.

Gr13

Mills produced 11.09 MT of sugar until January 15, up 6.8% from a year earlier, as crushing activities started earlier this season than the last one.

Isma said the country’s output is expected to drop in 2015-16, as poor monsoon rains in Maharashtra would hurt yield and drag down output by around 15% year-on-year to 8.7 MT, down 3 lakh tonne from the previous estimate.

However, output in Uttar Pradesh, the second-largest sugar producer, could rise marginally to 7.15 million tonne from a year before.

Priority sector tag for ethanol

Petroleum minister Dharmendra Pradhan on Friday favoured the inclusion of ethanol in the list of the priority sectors for lending by banks so that its production improves and the target of blending of this bio-fuel with petrol at a 10:90 ratio is realised.

“The industry has demanded the inclusion of ethanol in priority sector lending list. I am going to take up this issue with the finance ministry,” Pradhan said at a workshop on ethanol, organised by Isma. He added that the country will likely achieve a 5% ethanol blending with petrol this year and the government is willing to facilitate the creation of additional storage to realise the 10% blending target.

Stricter green standards for mills

The environment ministry has notified stricter standards for sugar factories, aimed at minimising water pollution.

“The specific wastewater discharge standards have been made stricter, by limiting the same to ‘200 litre per tonne of cane crushed’, as against the earlier limit of ‘400 litre per tonne cane crushed’,” the ministry said in a statement. Such a move will result in less consumption of water at the operational level.

“The final treated effluent discharge has been restricted to 100 litre per tonne of cane crushed and waste water from spray pond overflow, or cooling tower blow down to be restricted to 100 litre per tonne of cane crushed,” it said. Only a single outlet point from a unit has been permitted to encourage operational efficiency. Moreover, only one outlet or discharge point will be allowed, among other measures.

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