The Hindu Business Line : Sugar facts

This refers to the article “How true is the sugar sector’s Catch-22 situation?” (Business Line, November 14) providing data on revenue from sugar and by-products and claiming that sugar mills may not face difficulty in paying at least the Statutory Minimum Price of sugarcane (SMP) fixed by the Central Government.

Payment of SMP is the legal liability of sugar industry, notwithstanding the inadequacy of price realisation from sale of sugar and by-products.

We would, however, like to point out that some of the data, particularly those relating to production and revenue from by-products do not appear to be correct. For instance, molasses output, as a thumb rule, is around 4 per cent of the sugarcane crushed, press mud is also about 5 per cent of the crushed cane and surplus bagasse about 6 per cent of the crushed raw material.

Thus, the author’s assumption of molasses production at 270 kg, press mud at 300 kg, and bagasse at 230 kg per tonne of cane is incorrect. The correct data is only about 40 kg of molasses, 50 kg of press mud and 60 kg of surplus bagasse.

Likewise, price realisation to the sugar mills on sugar and its by-products, shown as Rs 1,819 per tonne of cane, is way beyond the actual realisation of no more than Rs 1,250 per tonne of cane. Similarly, the cost of extraction, projected at Rs 300, is way below the actual, which works out to more than Rs 400 per tonne of cane.

Finally, we would like to add that whereas the demand of sugarcane farmers to cover the cost of production thereof seems to be reasonable, it has also to be appreciated that the price to be paid can only be disbursed through realisation on sale of sugar primarily, plus a bit of additional revenue earned from by-products.

S. L. Jain Director-General Indian Sugar Mills Association New Delhi