The Hindu Business Line : ‘Govt should build sugar inventory through imports’

Mumbai, Dec. 9 With sugar production expected to fall below the Government estimate of 22 million tonnes, it may be the right time for the Government to build up inventory through imports, particularly when the international prices have plunged.

Mr Narendra Murkumbi, Managing Director, Shree Renuka Sugars, said sugar prices in the international markets will start rising once the five-month crushing season in Brazil ends in December.

“There are a few distress sales in the spot markets abroad due to the financial crisis. The Government should make good use of this opportunity,” he added.

Wrong Estimate

Before the start of sugar season 2008-09 in September, the Government estimated sugar output at 22 million tonnes against 26.5 million tonnes produced last year. However, with crushing being delayed and shortage of cane in Maharashtra, the industry estimates the production to be below 20 million tonnes with an opening stock of 9 million tonnes.

The crushing period in Maharashtra has been reduced to 120-150 days from the normal 200 days due to shortage in cane availability. Sugar production in Maharashtra will be lower by 39 per cent at 5.5 million tonnes against 9 million tonnes last year.

Of the 167 co-operative sugar mills in Maharashtra, only 121 were able to start operations and five of them have shut shop last week on the back of an increase in cane prices.

Sugarcane prices in Maharashtra have gone up from Rs 1,100 a tonne last season to Rs 1,500 a tonne in December, while in Uttar Pradesh companies’ plea against the State advised price of Rs 140-145 a quintal in the High Court was dismissed recently.

The recovery in Maharashtra and Karnataka is among the highest at 11.5 per cent against 9.5 per cent in Uttar Pradesh and 10-10.5 per cent in southern India.

At the recovery rate of 11.5 per cent, a tonne of sugarcane crush will yield 115 kg of sugar, while in Uttar Pradesh it will be 95 kg, said Mr Murkumbi.

Yield per hectare has been affected due to shortage of fertilizer and intermittent rainfall in the growing areas. Moreover, sugarcane farmers in Andhra Pradesh switched to rice and paddy; while in Maharashtra, corn, soybean and cotton snatched acreage from sugarcane.

The higher minimum support price announced by the Government lured farmers to switch crop.

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