The Hindu Business Line : Sugar realisations dip by Rs 60 a quintal

Turning bitter
Realisations down to Rs 1,640 a tonne from Rs 1,700. Earnings from advance licence holders were Rs 1,800-50. Higher allocation of free sale sugar has added to the woes.

New Delhi , July 26

Sugar millers in Maharashtra - the Union Agriculture Minister, Mr Sharad Pawar's home State - are an agitated lot these days.

Since July 4, when the Union Government banned sugar exports, ex-factory realisations have fallen from around Rs 1,700 to Rs 1,640 a quintal.

TIMING OF DECLINE

The Rs 60 a quintal decline comes even as Maharashtra's sugar production is slated to cross an all-time-high 70 lakh tonnes (lt) in the coming 2006-07 season (October-September).

Of the country's sugar exports of roughly 10.5 lt during the current season, an estimated four lt have been sourced from Maharashtra.

The exporters have mostly been factories outside the State, discharging their white sugar re-export obligations against past duty-free imports of raw sugar under the advance licence (AL) scheme.

"The bans has hit us, as our mills were realising Rs 1,800-1,850 a quintal from AL holders and others, who found exporting from Maharashtra to be a more economical option," said Mr Prakash Naiknavare, Managing Director, Maharashtra State Cooperative Sugar Factories' Federation (MSCSFF).

Maharashtra's sugar industry, dominated by cooperatives, is currently on a turnaround mode.

Bumper season ahead

During 2004-05, mills in the State could crush only 194.29 lt of cane and produce 22.36 lt of sugar. In 2005-06, these numbers recovered to 445.74 lt and 51.97 lt, respectively. But it is the ensuing season that is likely to be a bumper one. Good monsoon rains have ensured that 600-630 lt of cane would be available for crushing. At an average recovery of 11.5 per cent, this would translate into a sugar output of 69-72 lt out of the country's projected 230-235 lt.

FEDERATION MEET

"All this should ordinarily have been great news. But with prices dipping and a record production staring before us, we are a little apprehensive now. The Federation is convening a meeting of representatives from all factories on July 31 to take stock of the situation," Mr Naiknavare told Business Line.

Higher FSQ

Besides the export ban, higher free sale quota (FSQ) releases by the Centre has also contributed to the present bearish sentiments.

For June 2006, 3.89 lt of FSQ sugar was allocated to Maharashtra, compared with 2.38 lt in June 2005. Subsequently, following heavy rains and the blasts in Mumbai, mills were given a 10-day extension to fulfil their June quota. But again, for July 2006, 3.12 lt of FSQ was released, as against the 2.29 lt of July 2005. "There is too much sugar in the market and traders are in no hurry to lift", Mr Naiknavare added.

It is not only mills in Maharashtra who have seen a drop in realisations. Since July 4, ex-factory prices in Uttar Pradesh have also fallen from Rs 1,790 to Rs 1,750 a quintal, while going down from Rs 1,780 to Rs 1,740 in Tamil Nadu.

More Stories on : Sugar | Co-operatives | Maharashtra

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