The Hindu Business Line : Sugar production seen below projected levels

New Delhi, Jan. 8 Domestic sugar output during the current 2007-08 season (October-September) may hover in the 250-260 lakh tonnes (lt) range — much below the initially projected 300-310 lt levels.

In Maharashtra, the country’s top producer, 156 mills have been operational so far this season, against 175 during the same period of 2006-07. As on January 7, they had crushed 242.64 lt of cane and produced 26.72 lt of sugar at an average recovery of 11.01 per cent. The numbers for the comparative period of the previous season were 287.23 lt, 30.60 lt and 10.65 per cent, respectively.

Initial expectations

“We were originally expecting to crush 844 lt and produce 97 lt of sugar at an average recovery of 11.50 per cent for the whole season. Now, we may end up crushing just 700 lt and producing 80-81 lt,” said Mr Prakash Naiknavare, Managing Director, Maharashtra State Cooperative Sugar Factories Federation (MSCSFF). The 80-81 lt would be below even last year’s record 90.95 lt, which saw 798 lt of cane being crushed.

Crushing delays

Mr Naiknavare attributed the lower estimate to the delay in the start of crushing. “Normally, the season commences from mid-October, whereas we had planned to begin from October 1 in view of the bumper crop. But as the monsoon lingered on till October-end, the cane could not be harvested from the wet fields. Also, with Diwali falling only on November 9 (against October 21 last time), harvest labourers could not be arranged. The season could finally take off only from mid-November,” he told Business Line.

According to Mr Naiknavare, making up for the six-week delay would be difficult because of the monsoon rains from mid-June. “Last season, our mills did crush till June 15. But then, they had started by October 15, as against November 15 this time”, he added.

Moreover, many factories with weak financials have not been granted pre-seasonal loans from the Maharashtra State Cooperative Bank (MSCB). The latter has apparently been more prudent in extending these clean cash credit loans, requiring no collateral and given solely against the State Government’s counter-guarantee. As a result, not all mills have been able to take season.

Decreased cane yields

In Uttar Pradesh (UP) — which occupies the No 2 slot — the problem is mainly from the drop in cane yields. “Last year, crushing went on till June. This, in turn, affected the ratoon crop, which sprouts from the root stubbles of the harvested plant cane. Since there have been no rains since September, the growth period for the ratoon (harvested during November-January) was effectively restricted to July-August,” pointed out Mr Sanjay Tapriya, Director (Finance), Simbhaoli Sugars Ltd.

The ratoon cane yields this time are said to 20 per cent or more below last season’s levels. “Some of this could be recouped from the plant cane, to be harvested from end-January and on which we are yet to take a yield call. Also, there is more crushing capacity available in the State in the current season,” he noted. But, on the whole, “UP will only produce 78-80 lt in this season,” stated Mr C.B. Patodia, Advisor, K.K. Birla Group of Sugar Companies. The CEO of another leading sugar major projected an even lower figure of 75 lt (against the 84.75 lt of 2006-07).

Situation in South

While in Karnataka, mills are slated to produce almost last season’s level of 27 lt, in Tamil Nadu, “we see a dip of 10 per cent, which comes to about 2.5 lt”, said Mr M. Manickam, Managing Director of Sakthi Sugars Ltd. Andhra Pradesh, too, is reportedly heading for lower output.

All put together, the country could register a decline of around 25 lt, from the 283 lt sugar output for 2006-07. And with the trade reckoning the opening stocks of sugar in the current season at 95-96 lt (against the official estimate of 115 lt), the industry’s fortunes may swing sooner than anticipated till recently.

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