The Hindu Business Line : Woes of sugar industry likely to continue

Hyderabad, Dec. 31 If it was a bitter year for the sugar sector in 2007, it is going to be still worse in 2008 unless some corrective measures taken to reverse the trend.

“It seems the problems that hit the industry in 2007 will continue to dog till July-August period. Of all the problems, liquidity crunch will be the toughest,” says Mr R.S. Bhalerao, Secretary of the South Indian Sugar Mills Association (SISMA – Andhra Pradesh).

Production

The production has been pegged at 310 lakh tonnes (lt) for the whole of 2007-08 and the consumption requirement at 200 lt. “The remaining 110 lakh tonnes will have to be carried forward,” he said.

Mr Vasanth, a sugar farmer from Medak who led a team of farmers on a padayatra to Delhi to highlight agrarian crisis in the State, said the woes for the farmers would only increase in the coming year. “Crushing is going on a sluggish pace. The rate is lower at Rs 1,050 (a tonne) than last year’s price band of Rs 1,570-Rs 1,250,” he said.

There is an allegation that the sugar factories are deliberately resorting to a slower crushing schedule, keeping in mind the poor demand for sugar in the market.

Slackened pace

A senior executive of a Telangana sugar factory, on condition of anonymity, admitted to the fact the crushing had slackened this year. Asked whether it was a deliberate attempt by the factories, he said it could be one of the reasons. “Call it accidental or incidental, some factories are under upgradation and facing technical problems. This might have led to the delay in crushing,” he said.

With the fears of lesser cane price spread like wildfire, Andhra Pradesh had asked the factories to maintain last year’s prices. It, however, is not likely to happen.

Mr N.S.V. Sharma, Secretary of Federation of Sugar Growers’ Associations, contested the Government stand. “While the cost of production has gone up significantly over the last year, how can they order a status quo? We should get a higher price in tune with the raising costs,” he argued.

Mechanisation

Mechanisation (for harvesting) could help the farmers save some costs, he felt.

Mr N Nageswar Rao, President of SISMA, said the Government move to allow the factories to covert juice into ethanol would still take some time before it could bail out the industry in reaping additional revenues.