The Hindu Business Line : Bumper cane harvest to prolong crushing till May

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New Delhi March 7 A bumper cane crop — much more than what either the Government or the industry had bargained for — has meant that mills this year will end up crushing well onto the peak summer period.

Last year, most mills in Uttar Pradesh had stopped operations by the middle of April. This time, they will continue to run till mid-May. But, it is in Maharashtra, where the duration would be extended the most. While in 2005-06, the majority of factories closed by mid-March, with a few taking the season till the month-end, in the current season, crushing is slated to take place right till end-May.

Recovery rates

This, in turn, will push up production costs, as the sugar-to-cane recovery rates tend to fall after February. As it is, the average recovery in Maharashtra so far in the 2006-07 season, at 11.14 per cent, has been lower than the 11.63 per cent of 2005-06. There is every chance of the recovery going below 11 per cent by the end of the season, even though cane yields, crushing and sugar output levels would be at record levels.

To compensate for low recovery rates, the Maharashtra Government has now announced incentives for mills to prolong operations till the entire cane offered by farmers gets crushed. For every one-percentage point drop in recovery after April 16, mills are entitled to a compensation of Rs 50 per tonne, rising to Rs 100 per tonne after April 30.

Further, they are being given a transport subsidy of Rs 45 per tonne, if the cane is purchased at a distance of 50 to 100 kms. The subsidy is Rs 80 for distance of 101-150 km and Rs 150 for Rs 151 km and more. Sources say that the reason for the transport subsidy has to do with most of the higher production this time coming from Marathwada.

"This region has 44 mills, of which eight are permanently closed. The rest are mainly small mills of 1,250-2,500 tcd capacity. If the entire produce of the farmers is to be crushed, the only way is to transport the cane to mills in other regions," they noted.